Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

B P TRADING BILL [Lords]

As amended, considered; Amendments made to the Bill; Bill to be read the Third time.

Oral Answers to Questions — COLONIAL TERRITORIES

Colonial Development Corporation

Mr. Brockway: asked the Secretary of State for the Colonies if he will make a statement regarding proposals to increase the borrowing powers of the Colonial Development Corporation.

The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd): The Government share the Corporation's view that it will need additional capital in order that it may embark on further projects in Colonial Territories. The amount is still under discussion.

Mr. Brockway: While I welcome that assurance, is it possible to put an end to this uncertainty before long, because the limit of £100 million is already committed, and schemes amounting to another £38 million are now being discussed, and because of the general recognition which that affords of the value of the work done by the Corporation?

Mr. Lennox-Boyd: It is not true to suggest that the Corporation is now prevented by shortage of capital from embarking on further projects. It has £56 million outstanding, and the total effective commitments are about £84 million. I fully understand that the Corporation will need further funds soon, and we are discussing the matter with it. As I have said, an announcement will be made after we have had the discussions.

Mr. Marquand: asked the Secretary of State for the Colonies when he intends to introduce the necessary legislation to permit the Colonial Development Corporation to continue to operate existing schemes in Colonial countries which achieve independence and to provide further capital for such schemes.

Mr. Lennox-Boyd: Legislation is not required for this purpose. The Corporation can do these things under the Overseas Resources Development Acts as they stand at present.

Mr. Marquand: May I ask the right hon. Gentleman whether, before making his statement of 1st July, he consulted the Corporation, and if he has not done so, will he do so at an early date?

Mr. Lennox-Boyd: I and my fellow Ministers, as well as officers of my Department, are in constant touch with the Corporation on this and everything else.

Mr. Marquand: asked the Secretary of State for the Colonies whether the authority of a United Kingdom Minister will be required to enable the Colonial Development Corporation to undertake the management of development projects within the territory of another independent Commonwealth Government.

Mr. Lennox-Boyd: This question is at present being considered in connection with the legislation which will be required to enable the Colonial Development Corporation to carry out this new function.

Mr. Marquand: Has the right hon. Gentleman had any assurance from any of the Prime Ministers or other representatives of independent Commonwealth countries who were here recently that such countries will be willing to use the services of the Corporation if the Corporation is debarred, as apparently it will be, from making any financial contribution when it undertakes a scheme of this kind?

Mr. Lennox-Boyd: I know that all Dominions would be very interested in suggestions of this kind, though every particular case would, of course, have to be examined on its merits.

Mr. Marquand: In preparing the legislation, will the right hon. Gentleman consider the suggestion that when undertaking a management agency it would


not be unreasonable for the Corporation itself to have some share of the finances of the scheme?

Mr. Lennox-Boyd: No, Sir. The basis of this association was that it would be without commitment of Corporation funds, but, subject to that, I will take notice of anything that the Corporation may say.

Apprenticeship Schemes

Mr. Wilfred Paling: asked the Secretary of State for the Colonies what provision is made by the Governments of Northern Rhodesia, Nyasaland, Tanganyika, Uganda and Kenya, for apprenticeship schemes in the mining and building industries and in agriculture, respectively.

The Under-Secretary of State for the Colonies (Mr. John Profumo): I am communicating with the Governments concerned, and will write to the hon. Member when the information is available.

Mr. Paling: Will the hon. Gentleman ensure that opportunity is given to the Africans, who are very discontented with the present state of affairs, to be really trained and to earn decent wages, like anyone else in their own territory?

Mr. Profumo: The extension of the present ordinance to Africans is at present being considered by a special committee set up by the Northern Rhodesian Government.

Minimum Wage Rates

Mr. Swingler: asked the Secretary of State for the Colonies in which Colonial and trust territories the minimum wage rates are assessed on a family budget of three persons; and in which territories they are fixed on the subsistence level of one adult male worker.

Mr. Profumo: Family responsibilities are no doubt taken into account when statutory minimum wages are fixed but, so far as I am aware, statutory wage fixing bodies, as in this country, are not bound by specific criteria, except in Kenya. The same is true of wage rates determined by collective bargaining.

Mr. Swingler: The hon. Gentleman says that they are no doubt taken into account, but would he make a survey to get detailed information in order to find out exactly to what extent they are taken into account? Is it not a fact that in these

Colonial Territories family responsibilities are assessed in fixing minimum wage rates? To what extent are any other responsibilities—for example, provision of family allowances—taken into account to enable the families to be kept together?

Mr. Profumo: I think that that raises a very much wider question. I will be glad to answer the hon. Gentleman on that, but 1 would be glad if he would put such questions on the Order Paper.

Northern Rhodesia and Nyasaland (Soil Erosion)

Sir L. Plummer: asked the Secretary of State for the Colonies what steps are being taken by the Governments of Northern Rhodesia and Nyasaland to deal with the problem of soil erosion in the African reserves.

Mr. Lennox-Boyd: I am consulting both the Governors so as to provide up-to-date information and, as the reply is likely to be both lengthy and detailed. I will write to the hon. Member.

Sir L. Plummer: Is the Colonial Secretary aware that many Africans oppose schemes for preventing soil erosion for reasons of superstition and because they are inately conservative and do not like changes? Will he, therefore, take steps to strengthen the staff of the agricultural advisory service to help the Africans towards enlightenment and education?

Mr. Lennox-Boyd: I am quite aware that one of the better qualities of the African is inate conservatism, but I am always ready from time to time to see how this can be brought in touch with modern life.

Oral Answers to Questions — HONG KONG

Cloth Exports

Mr. Fletcher-Cooke: asked the Secretary of State for the Colonies if he will discuss with the Government of Hong Kong how imports of Hong Kong cloth into the United Kingdom can be limited, in view of the refusal of the Hong Kong Cotton Spinners' Association to agree to any voluntary arrangements for limitation.

Mr. Lennox-Boyd: It would be contrary to Her Majesty's Government's policy to impose restrictions on Hong Kong's exports to this country.

Mr. Fletcher-Cooke: Will not my right hon. Friend agree that it is a thousand pities that when the merchants and trade interests in India and Pakistan are anxious and willing to agree to a scheme of voluntary limitation if the merchants and producers in Hong Kong so agree, my right hon. Friend feels, the Hong Kong merchants and producers having refused, that he cannot even use his good offices to ascertain whether they will agree to some tripartite scheme of voluntary limitation?

Mr. Lennox-Boyd: I could not accept the inferences in my hon. Friend's question. Hong Kong is a Colony for whose welfare we are responsible. It has concentrated on manufactures largely because of the strategic controls that we imposed upon it, and it would have been in a difficult position if we had not allowed it to develop manufactures in this way. It has no independent membership of G.A.T.T. and it looks to Her Majesty's Government to protect it, as would any part of the United Kingdom.

Mr. Thornton: While I appreciate that the right hon. Gentleman's over-riding interest is the welfare of the colonial peoples, is he not aware that the United Kingdom cotton textile industry is having to pay a disproportionate price for the industrial development in Hong Kong? Is he satisfied that Hong Kong may not make the same mistake as Japan did in concentrating too much on an export industry, the trade of which, according to the trends over the last forty years, has continued to decline in the world? May it not be that Hong Kong will meet the same fate as Japan did?

Mr. Lennox-Boyd: We ought to look at this matter in perspective. Hong Kong production is a minute fraction of United Kingdom production, and the consequence of interfering with the free entry of British Colonies into the United Kingdom market in the interests of a single industry in the United Kingdom would be widespread and would have to be weighed most carefully before any Government took action.

Oral Answers to Questions — WEST INDIES

Antigua (Apprenticeship Training)

Mr. Malcolm MacPherson: asked the Secretary of State for the Colonies how

many boys applied to the Industrial Training Committee of Antigua for apprenticeship training during the twelve months ending at the latest convenient date; for how many such training has been arranged; and what opportunities of learning a trade are planned for the others.

Mr. Profumo: During the year ended the 31st January, 1957, the Industrial Training Committee received 169 applications for apprenticeship training. The number of applicants selected for training was 42, of whom five have so far been apprenticed. The Committee is trying to find places for the others, but opportunities are limited.

Mr. MacPherson: Is there not a remarkable gap between the number of applications and the number who have been placed? Is not five a very small proportion out of a population in the community of 50,000? Can the hon. Gentleman say what avenues are being tried to expand this service?

Mr. Profumo: As I said, the trouble is that the opportunities are limited, but the Industrial Development Board has recently brought into operation an edible oil factory, a cotton ginnery and a small arrowroot factory, and a cornmeal factory will shortly be constructed.

Federal Capital (Site)

Mr. Reeves: asked the Secretary of State for the Colonies if Her Majesty's Government have yet approached the Government of the United States of America with the request of the Standing Federation Committee of Trinidad that their base should be surrendered to them, in terms to be arranged, for the site of the new federal capital.

Mr. Profumo: Yes. As a result of the approach, discussions between representatives of Her Majesty's Government and the Government of the United States of America have opened today. Delegates from the Standing Federation Committee are taking part.

Mr. Reeves: Will the Minister press the American Government in order that they may see the great advantages of an airfield near Port of Spain, since other


airports have nowhere near the same advantages?

Mr. Profumo: That is one of the matters which will certainly be very much in mind.

Trade

Mr. Reeves: asked the Secretary of State for the Colonies if the British West Indies Trade Commission in London will be invited to attend the meeting of the signatories of the General Agreement on Tariffs and Trade; and what are the views of the Economic Committee which met in Port of Spain, Trinidad, in May, on the effects of the European Free Trade Area on the products of the West Indies.

Mr. Profumo: My right hon. Friend will be consulting Colonial Governments, nearer the time, regarding the necessity or otherwise for attaching colonial advisers to the United Kingdom delegation to the session of the G.A.T.T. which is to consider the Treaty of Rome there is no objection in principle to such attachment.
The proceedings of the Regional Economic Committee are confidential. The views of the Committee are now under consideration by the West Indian Governments.

Financial Assistance

Mr. Reeves: asked the Secretary of State for the Colonies what proposals have been made by Her Majesty's Government for financial assistance to the West Indian Federation during the first ten years of federation in addition to the present commitments of the Colonial Development Corporation and the Colonial Development and Welfare Corporation in order to increase urgent economic development.

Mr. Profumo: The assistance which Her Majesty's Government have undertaken to provide to the Federal Government is described in Cmd. 9733. Consideration of a case for any further assistance must await a detailed and realistic assessment of the most pressing needs of the area and a co-ordinated regional economic plan. I am aware that the Standing Federation Committee has the importance of such planning much in mind and no doubt it will be one of the first preoccupations of the Federal Gov-

ernment. My right hon. Friend is considering how best this Department can give the Federal Government any help it may require in the drawing up of such a plan and in the assessment of regional needs.

Mr. Reeves: Does the Minister realise that the success of this great experiment will depend largely upon the help which the West Indies receive, particularly during the early years, and that if the sum can be made as large as humanly possible there is more chance of the Federation succeeding?

Mr. Profumo: Yes, Sir, but before considering whether anything further can be done there must be a detailed economic planning assessment.

Grand Bahama Port Authority

Mr. Frank Allaun: asked the Secretary of State for the Colonies the minimum wage rates and the wage rates for skilled workers which will be paid to employees of the firms engaged in the development of the port of Grand Bahama, under the terms of the agreement with the port authority.

Mr. Profumo: Actual rates are not prescribed but the Grand Bahama Port Authority Area has undertaken to pay Bahamian workers, both skilled and unskilled, wages or salaries comparable with those obtaining in similar works elsewhere in the Colony. Firms licensed by the Authority to operate in the port area are required to give a similar undertaking.

Mr. Allaun: Will the Minister consider recommending that the scandalously low minimum rate be raised and further that the minimum rates throughout the Caribbean be standardised, otherwise the islands paying better wages will be deprived of capital which will flow of necessity to the Bahamas where wages are notoriously lower?

Mr. Profumo: I think that is a much wider question than the one on the Order Paper. In the case we are discussing the minimum wages laid down by ordinance are often exceeded, so that the arrangements made by the Government and the Authority are really more favourable than they would otherwise be.

Dominica and Trinidad (Venereal Diseases)

Mr. D. Jones: asked the Secretary of State for the Colonies what provision exists on the Island of Dominica for health teaching about venereal disease.

Mr. Profumo: Health teaching about venereal diseases is undertaken within the ambit of a yaws eradication project, on which W.H.O. and U.N.I.C.E.F. are assisting. This has been in operation for some years, and a start is being made under it to control venereal diseases.

Mr. D. Jones: asked the Secretary of State for the Colonies if he will give the latest available figures for the incidence of venereal diseases and yaws in Dominica and Trinidad, respectively.

Mr. Profumo: The 1955 incidences per thousand of population for venereal diseases and yaws respectively were about 5·5 and 17 in Dominica and 9 and 0·6 in Trinidad.

Mr. Jones: The hon. Gentleman will be aware that there are more than two and a half times as many persons in Dominica to each doctor as there are in any other British territory. How far does that contribute to an incidence of these diseases in Dominica much higher than is to be found in any other territory, and how far does the fact that the housing conditions of the majority of the people in Dominica are worse than are to be found in any other territory under the British Crown contribute to this result also? Is it not the fact that overcrowding and shocking housing are responsible for these health conditions?

Mr. Profumo: I should not wish to accept any of that contention. However, it happens that an important Minister from Dominica is here at the present time, and either my right hon. Friend or I will consult him on this matter.

Oral Answers to Questions — MAURITIUS

Indian Children (School Examinations)

Mrs. Butler: asked the Secretary of State for the Colonies what proportion of the total number of Indian children at school in Mauritius failed the 6th

standard examination during the years 1954–57, respectively.

Mr. Profumo: The information is not available since the lists of candidates give no indication of their religion or racial origin.

Mrs. Butler: Is the hon. Member aware that a considerable number of Indian children fail this examination because of the great difficulty they have in mastering the French language? Will he encourage the carrying out of the recommendations of successive Royal Commissions and the Ward Report that they should have their basic instruction in their mother tongue, with English as their second language, and that French should no longer be compulsory in this examination?

Mr. Profumo: I have recently been to Mauritius and I was not made aware of this difficulty in any way. I do not believe there is any reason to think that the Indo-Mauritians are suffering more than other children. There is a large proportion of failures, but the Government hope that that is only a phase in the development of education.

Oral Answers to Questions — NORTHERN RHODESIA

Local Government (African Representation)

Mr. Brockway: asked the Secretary of State for the Colonies if the Government of Northern Rhodesia have accepted the recommendations of the Brown Committee on African representation on local government authorities.

Mr. Swingler: asked the Secretary of State for the Colonies what proposals have been made by the Government of Northern Rhodesia to introduce African representation on municipal councils.

Mr. Lennox-Boyd: The Brown Committee on African Representation in Local Government in Urban Areas recommended that special arrangements be made for greater participation by Africans in the administration of the African housing areas but did not recommend direct representation in the local authorities. The report of the Committee is to be debated in the Northern Rhodesia Legislative Council during the present meeting.

Mr. Brockway: Would the right hon. Gentleman bear in mind the fact that there are no African representatives at all in these local authorities and that he has recently given me replies about the population which show twenty-seven Africans to one European, eight to one European and five to one European. If the demands of the Africans for a place in their country are to be met, would he not at least encourage African representation in these local authorities?

Mr. Lennox-Boyd: I am all for increasing the chances of Africans playing a proper part in their own affairs. I will lay this Report in the Library of the House. I hope the hon. Member will hear in mind, however, that the present position is that African housing areas within local authority areas are not rate-able and that Africans are therefore not ratepayers in the housing areas. This is a factor which ought to be borne in mind. If, after further reading the Report—

Mr. Brockway: I have read it.

Mr. Lennox-Boyd: —the hon. Member wants to question me further, I shall be glad to answer him.

Mr. Swingler: Would not the right hon. Gentleman reconsider this matter very carefully? Is it not basic to our ideas of government in these territories that we should govern with the consent of the majority? Is it not clear that the Africans here are in all cases in the majority? Will not the Secretary of State say that it is his policy that as soon as possible the majority should be represented on the governing body?

Mr. Lennox-Boyd: Most certainly. I made that quite clear when I was in Northern Rhodesia. I ask hon. Members to ponder the Report carefully. It puts the picture as a whole.

Africans (Skilled Occupations)

Mr. Stonehouse: asked the Secretary of State for the Colonies what action the Government of Northern Rhodesia intend to take to remove discrimination against Africans who are not allowed to undertake skilled occupations in Northern Rhodesia.

Mr. Lennox-Boyd: Except for restrictions arising from the agreements which have been made by certain trade unions

and employers, notably in the copper mining industry, there is no limitation on the opportunities for skilled African workers to follow their trades in Northern Rhodesia. Relaxation of some of the restrictions on the Copperbelt has been achieved by collective bargaining between the European and African Unions and the companies concerned. The Government welcome this advance, and would certainly welcome further advance, but agree with the view of the Forster Board of Inquiry in 1955 that the solution of this problem rests upon the parties engaged in the industry.

Mr. Stonehouse: Is the right hon. Gentleman aware that, although there is no legal discrimination, there are great social and other discriminations which are preventing Africans from following skilled occupations which, a few miles away in the Belgian Congo, they could undertake? Will he look further at this matter to see whether steps cannot be taken to improve the Africans' chances?

Mr. Lennox-Boyd: I am not one of those who need educating in this matter. I am sure that the hon. Gentleman will use all his influence with those people who are still in a position to make it difficult, but I think that there has been remarkable progress, and I must emphasise that in a question of this kind, where everyone has right, of a kind, on his side, it is necessary to proceed by agreement.

Riot Damage Ordinance, 1957

Mr. Stonehouse: asked the Secretary of State for the Colonies if he will advise the Governor of Northern Rhodesia to amend the Riot Damage Ordinance of 1957 to allow for a means of appeal against the imposition of a levy under Section 8 and that such an appeal shall be to a judicial body.

Mr. Lennox-Boyd: No, Sir.

Mr. Stonehouse: Does not the Colonial Secretary agree that it can create a most unfortunate impression when a fine can be imposed on a political body without any appeal being allowed, and will he look further into this?

Mr. Lennox-Boyd: I think that if the hon. Member will re-read the history of this country, he will come to the conclusion that in a comparable stage of


political development this situation existed here. Levy, or compensation, is essentially an act of the Executive, and I cannot see on what principle it would be possible to make a levy of this kind subject to a judicial court.

Civil Service (Salaries)

Mr. Stonehouse: asked the Secretary of State for the Colonies what is the approximate average salary paid to Africans and Europeans, respectively, in the territorial Civil Service in Northern Rhodesia; and what provision is being made to train Africans for higher positions.

Mr. Profumo: I have consulted the Governor, and when I have his reply I will circulate the information in the OFFICIAL REPORT.

Mr. Stonehouse: Is the Under-Secretary aware that according to figures published three months ago, the average salary paid to a European in the Civil Service is £1,000 a year, and the average paid to an African only £113 a year? Will he have a look at this matter to see what further opportunities Africans can have to advance into the higher grades?

Mr. Profumo: The hon. Gentleman is now proceeding to answer his own Question. I prefer to wait for the official figures from the Governor, and then we may be able to go into the matter a little further.

Building Industry (Wages)

Mr. Wilfred Paling: asked the Secretary of State for the Colonies the minimum wage payable to Africans in the building industry in Northern Rhodesia; and the number of Africans receiving minimum wages, the number receiving skilled labourers' wages, and the number of European skilled labourers receiving similar wages.

Mr. Profumo: I am asking the Governor for this information and, when I receive his reply, will circulate it in the OFFICIAL REPORT.

Peter Hubumba

Mr. Brockway: asked the Secretary of State for the Colonies why Peter Hubumba, Deputy Provincial President of the African National Congress of the

Southern Province of Northern Rhodesia, was suspended by telegram on 23rd April, 1957, from membership of the Plateau Tonga Native Authority in the Mazabuka district of Northern Rhodesia; and if he has now been reinstated.

Mr. Lennox-Boyd: I am consulting the Governor and when I have his reply I will write to the hon. Member.

Mr. Brockway: Will the right hon. Gentleman do something more than that? Is he aware that this gentleman has served eleven years a a councillor, that he was suspended just by telegram, that a meeting was then called to disband the African Congress, and that the meeting of the Native Authority refused to do so? Will the right hon. Gentleman see that this gentleman, as a leader of the African Congress, is reinstated on that authority?

Mr. Lennox-Boyd: The Governor's remarks may provide an interesting comment on the hon. Gentleman's premature observations.

Maize and Wheat Production

Mr. Sydney Irving: asked the Secretary of State for the Colonies what steps are being taken by the Government of Northern Rhodesia either to stabilise the production of maize or to secure other outlets for the rapidly increasing quantities being produced particularly by Africans.

Mr. Profumo: I am consulting the Governor and will circulate the information, when it is received, in the OFFICIAL REPORT.

Mr. Irving: If the hon. Gentleman is consulting the Governor, would he bear in mind also that, if he does not do something and the Governor does not do something very shortly about the overproduction of maize in this territory, there will be a great deal of distress among African farmers, and will he ensure, if he cannot get other outlets, that there are other forms of production which could be usefully employed in the country?

Mr. Profumo: It would, I think, be wise to await the information from the Governor.

Mr. Sydney Irving: asked the Secretary of State for the Colonies what encouragement is being given by the


Government of Northern Rhodesia to the dry land production of wheat; and what proportion of the total wheat consumption of Northern Rhodesia is imported.

Mr. Profumo: I am consulting the Governor and will circulate the information, when it is received, in the OFFICIAL REPORT.

Mr. Irving: The House will be distressed at the hon. Gentleman's lack of information. Will he bear in mind, until such time as he gets the information, that there is imported into this territory a considerable quantity of wheat, and, having regard to the subject of the previous Question, namely, the overproduction of maize, would this not be an avenue for the constructive reorientation of crop policy in the territory which would help African and European alike?

Mr. Profumo: I think that I ought just to explain to the hon. Gentleman that about 90 per cent. of our Questions usually require consultation with Governors. These Questions came to me only last Friday and I know that the hon. Gentleman, as would any other hon. Member, would wish the information given to be accurate. But it does take time.

African Education

Mr. J. Johnson: asked the Secretary of State for the Colonies the amount of the trimming of the African education estimates of Northern Rhodesia because of the fall of the copper revenues.

Mr. Lennox-Boyd: When my hon. Friend in his reply on 4th July mentioned a "trimming" of the estimates, he was referring to the Northern Rhodesia estimates generally. The position is that instead of an expansion of more than 20 per cent. over all Government Departments, which would have maintained the rate of development and which had been hoped for, the 1957–58 budget, just introduced, provides for an increase over the previous year at rather more than 9 per cent. for recurrent expenditure on African education and rather less than 9 per cent. overall.

Mr. Johnson: I thank the right hon. Gentleman for that helpful answer, but would he agree that any economy at all would be disastrous? Would he agree that much more money needs to be spent,

because there is only one boys' secondary school in that Colony with its 2 million Africans and there is not yet one girls' secondary school with a school certificate course?

Mr. Lennox-Boyd: I am very conscious of this, but, clearly, the price of copper is a factor. I think that the fact that the average increase in expenditure is less than 9 per cent. but in the case of African education it is more than 9 per cent. is an earnest of the intentions of the Government of Northern Rhodesia in this regard.

Oral Answers to Questions — MALTA

Talks

Mr. Teeling: asked the Secretary of State for the Colonies the present position of the negotiations with Malta; when he will make a statement on the employment situation there; and what is the latest offer made by Her Majesty's Government to the Maltese Government.

Mr. Lennox-Boyd: I am hoping to have talks in a day or two with the Prime Minister, who is over here for medical consultation.

Mr. Teeling: Will my right hon. Friend bear in mind that we have only a little more than a fortnight before the Recess and that after that we shall be away for about three months? Will he bear in mind that many of us will feel that perhaps we are being treated a little casually if we are not told something before the House rises?

Mr. Lennox-Boyd: We are dealing with very big issues which cannot always be settled to correspond with Parliamentary sittings, but I hope that my hon. Friend agrees that even in Recess I still know what he feels.

Mr. E. L. Mallalieu: Is the right hon. Gentleman aware that this proposal to integrate Malta and the United Kingdom has struck the imagination of decent-minded people not only in the Commonwealth but all over the world and that there is a feeling abroad that he and his right hon. Friends are dragging their feet in this matter?

Mr. Lennox-Boyd: That is quite untrue. My views remain unchanged, but I would not accuse those who disagree with me of indecency.

Oral Answers to Questions — KENYA

Land Consolidation Schemes

Mr. Pargiter: asked the Secretary of State for the Colonies what provision is being made by the Government of Kenya for the Ahoi younger sons and others, who were able to farm their own land under tribal custom before the land consolidation schemes deprived them of this right, to buy or lease land in other parts of Kenya.

Mr. Profumo: No person who is farming his own land under tribal custom is being deprived of his land rights. On the contrary such rights are being ascertained and confirmed by a formal process. Ahoi and others who have no land of their own will now be able to buy and lease land by a simple and cheap procedure which will provide a certainty and security hitherto unknown to customary law. They will also have the opportunities described in my reply to the hon. Member for Eton and Slough (Mr. Brockway on 8th March. The land needs of younger sons present a problem only where there is a shortage of land. They will be more easily met by these new processes, which make it easier to acquire or lease land.

Mr. Pargiter: Am I to understand from that reply that adequate land is available for the whole of the Ahoi younger sons and others, provided, of course, that they are able to buy or lease it? Will the facilities be such that they can readily acquire the land or will there be created a landless class of peasants who are forced to enter other occupations?

Mr. Profumo: I think that if the hon. Member reads my reply, which is carefully worded, he will understand the situation. If he has any particular question which he would like to ask after that, I will do my best to answer it.

Mr. Baldwin: Is my hon. Friend aware that the tribal system and the breaking up of land leads to fragmentation and soil erosion and that, if something is not done to stop it, much of the land in Kenya will be as productive as the Sahara Desert? Is he aware that land consolidation is doing a grand job in these tribal areas and that, although there was

resistance at the start, the people are now welcoming the scheme which is operating?

Mr. Profumo: That is so.

Detainees (Rehabilitation)

Mr. Pargiter: asked the Secretary of State for the Colonies on what conditions a hard case detainee in Kenya is permitted to qualify for rehabilitation; and on whose authority and on what evidence such decisions are taken.

Mr. Lennox-Boyd: Rehabilitation is open to all detainees, but the "hard case" or intractable detainees are so called because of their persistent refusal to have anything to do with it. Nevertheless, it is the Kenya Government's policy to offer detainees of this class further opportunities of speeding their release by moving them to camps where there are large numbers of co-operating detainees. In most cases so far, this has resulted in the non-co-operators beginning to work their passage to release through the process of rehabilitation.

Mr. Pargiter: Is the right hon. Gentleman aware that according to The Times this morning, the Governor of Kenya has indicated that there still remain 23,000 of these cases, and that we are now coming, in his words, to the "more difficult characters", and that it is impossible to say whether our present system of release and rehabilitation will continue to be suitable? Will he keep the House informed of any changes in the system, and of such other measures as may be deemed to be desirable in order to deal with these more difficult cases?

Mr. Lennox-Boyd: Indeed, I will take the House into partnership on every possible occasion. Although it is true that 23,000 are still in detention, it is also true that 45,000 who were in detention have been released.

Mr. Stonehouse: Can the Colonial Secretary give an assurance that when a detainee appeals for release, he may be present throughout the proceedings of the advisory board hearing his case?

Mr. Lennox-Boyd: Well, Sir, there are some difficulties there; but I will discuss the matter with the Governor, who is now in London.

African Political Meetings (Restriction)

Sir L. Plummer: asked the Secretary of State for the Colonies what reply has been given by the Government of Kenya and by the United Kingdom Government to the request of the Nairobi District African Congress that restrictions on African political meetings should be cancelled.

Mr. Lennox-Boyd: This request has not yet been sent to me officially through the Governor, and I am unaware of the terms of any reply which may have been sent by the Kenya Government. But control of these meetings is essential to the maintenance of public order, and the Kenya Government have my full support for their present policy.

Sir L. Plummer: Is the Colonial Secretary aware that the restrictions amount virtually to a total ban on open-air meetings, and, in view of the necessity of listening to the political aspirations of the Africans, will he make representations to see whether the restrictions, if not abolished, can at least be further reduced?

Mr. Lennox-Boyd: No, Sir, but I am very ready that the Governor should have a talk with the hon. Gentleman, and with any other hon. Members about this matter. It is not true that this restriction leads to a complete ban. For specific meetings in rural areas where no halls can be used, permission is given, if the authorities are satisfied that the local situation and the facilities for keeping public order are satisfactory. But I am not prepared to disregard the advice of those people on whom the blame would lie if disorder occurred.

Mr. J. Johnson: Can the Minister confirm that Mr. Tom Mboya and the elected members of the Legislative Council met the Governor on this very subject as far back as 10th June? Can he tell the House what answer was given to them on that occasion?

Mr. Lennox-Boyd: Yes. They were told what I have told the House—that, on certain conditions, open-air meetings in rural areas can be allowed. But those conditions must be fulfilled, and nobody can claim exemption from that obligation.

Gathigiriri Works Camp (Disciplinary Inquiry)

Mrs. Castle: asked the Secretary of State for the Colonies (1) how many convictions there have been for assault on prisoners at Gathigiriri Works Camp, Kenya; how many prisoners have died as a consequence of ill-treatment; what members of the staff were involved in these convictions; and what was the sentence in each case;
(2) on whose authority orders were given by Jasiel Njau Kariuki, a rehabilitation assistant at Gathigiriri Works Camp, Kenya, for a detainee to be beaten and hung up by his wrists from a beam.

Mr. Paget: asked the Secretary of State for the Colonies (1) whether he will make a statement with regard to the death of Macheri Githuma, a detainee in Kenya;
(2) what action he proposes to take upon the judicial comment made by Mr. Justice Pelly Murphy in Kenya that he suspected that orders given by an African rehabilitation assistant for Macheri Githuma to be beaten and hung by his wrists from a beam were ordered and carried out with the tacit approval of his superior officer;
(3) whether he will place in the Library a transcript of the trial of five persons in Kenya resulting from the death of Macheri Githuma.

Mr. Lennox-Boyd: Macheri Githuma was one of fifty intractable detainees sent to Gathigiriri Camp for rehabilitation. Soon after arrival each man was placed separately in a hut with a small group of detainees under rehabilitation. Jasiel Njau Kariuki, an African rehabilitation assistant, led the men in his hut in an assault on Githuma, as a result of which he collapsed. He was taken outside the hut but died soon after.
The Attorney-General directed prosecution of Njau and five detainees for murder. Medical evidence at the trial showed that death could not be proved to have been due to the assault. Proceedings against one detainee were stopped; the other defendants were later acquitted of murder but convicted of assault causing actual bodily harm. Njau was sentenced to twelve months' imprisonment with hard labour and the


remainder to three months. I will consider the question of placing a copy of the proceedings in the Library.
The Attorney-General decided that there was no evidence to support a criminal charge against the camp commandant and rehabilitation officer. The Governor ordered that their conduct should be the subject of a disciplinary inquiry, which is now taking place under the chairmanship of the Solicitor-General. I can, therefore, make no statement about their alleged part in this incident at present.
I am not in possession of details of any other convictions for assault at this camp, nor am I aware of other deaths of detainees there. I am consulting the Governor and will circulate any relevant information in the OFFICIAL REPORT.
As a result of this incident the Governor personally visited the camp in February and ordered measures for closer supervision designed to prevent any recurrence of incidents of this nature.

Mrs. Castle: Is not the Colonial Secretary aware that it is very unsatisfactory to have five Questions lumped together in this way, thus restricting the possibility of really elucidating the innumerable details which arise?
Will the right hon. Gentleman give two assurances? First, will he let us have a full report of the disciplinary inquiry so that we can be sure there is not in this case the same sort of evasion of responsibility as took place in the case of Kamau Kuchina? Is he also aware that the defending counsel of two of the detainees at the trial of Njau Kariuki made the statement that:
We have evidence that there were other convictions in the camp for similar assaults and I am informed they numbered no less than 27.
In view of the gravity of this statement, will the Colonial Secretary let the House have either a denial of this fact when he has authenticated the statement, or the full details of the twenty-seven convictions which throw a grave light on this question of the rehabilitation service?

Mr. Lennox-Boyd: I would suggest that it hardly helps in this case if the hon. Lady unjustly accuses me of evasion in a previous one. I am ready to consider laying any relevant papers before the House. When I last did so with regard

to her other charges, the charges almost immediately dried up. The only correspondence in my office is from people who confessed themselves disillusioned at having listened to the hon. Lady, and naturally I am only too ready to follow the previous precedent.
I cannot agree with what the hon. Lady has said. If she cares to give me those details or come and see the Governor of Kenya, who is now in London, and give him personally the details, I shall be only too anxious, as is the Governor of Kenya, that nothing should be covered up.

Mr. Paget: Is the right hon. Gentleman aware that I believe that a wonderful job has been done by a great many people in connection with this rehabilitation project, but that nonetheless one is frightfully concerned when these horrible cases occur and even more concerned when the sentences appear to be so inadequate? Secondly, is the right hon. Gentleman aware that there seems to be a certain delusion in Kenya that the offence of murder involves only killing whereas in fact it also involves acceleration of death? When a man is thrashed and hung up by his wrists and dies, it is a little odd to hold that he would not have died rather later if he had not been treated in that way.

Mr. Lennox-Boyd: I am always prepared to listen to what the hon. and learned Gentleman has to say. He has had personal experience of what armed conflict means and he knows some of the difficulties under which the security forces have been operating in Kenya. In this case I think that if he reads my answer and my assurance, he will realise that I am only too anxious that all the facts should be known. I am ready to join him as well in any talks with the Governor, if the Governor is, as I do not doubt he would be, ready to discuss this case which I understand quite naturally has caused some anxiety to hon. Members on both sides of the House, and not least to those who have chosen to pursue the matter with me by correspondence and not necessarily in this way. 
May I also ask hon. Members to view this matter in the light of the vast problem in Kenya and of the 45,000 people who have been released in order, one hopes, to start again a new and good life in Kenya?

Constitution (Talks)

Mrs. Castle: asked the Secretary of State for the Colonies what official discussions are planned with Sir Evelyn Baring, the Governor of Kenya, regarding the constitutional deadlock in that territory.

Mr. Lennox-Boyd: As is usual about this time of year, the Governor is paying a brief visit to give me an up-to-date account of the situation in Kenya.

Mrs. Castle: Will the Colonial Secretary use this opportunity of discussions with the Governor to press upon him the desirability of immediate increased representation being given to Africans in the Legislative Council, in order to create an atmosphere of confidence which will enable multi-racialism to proceed in that Colony?

Mr. Lennox-Boyd: Quite naturally, I shall take advantage of the Governor's presence here to consider with him what negotiations and discussions on these matters are possible within the confines of the undertakings given by my predecessor, by which, naturally, I am completely bound.

Mr. J. Johnson: Is the right hon. Gentleman aware that Tom Mboya is flying here at this moment, that two Cabinet Ministers are in the same plane, and that two other Ministers from Kenya are already in this country? Will he, therefore, consult these men in high positions in Kenya with a view to agreement being reached as early as possible on a constitutional conference long before 1960?

Mr. Lennox-Boyd: As the hon. Gentleman knows, I have never shown any reluctance to see visitors from any Colonial Territory. He referred to Mr. Tom Mboya as being in a high position in Kenya. I am anxious that he should be in a position of responsibility in Kenya, but so far he has refused. I think that responsibility is more important than height, despite my own.

Oral Answers to Questions — CYPRUS

Turkish-Cypriot Town Councillors (Resignation)

Major Wall: asked the Secretary of State for the Colonies how many Turkish-Cypriot town councillors have recently

resigned their office; and what reason they gave for their resignation.

Mr. Lennox-Boyd: Twenty-one. A message to the Governor gave as the reason, that the rights of Turks are not effectively protected in municipal councils and are left at the will of the majority, which exploits its position to achieve its own political aspirations.

Major Wall: Can my right hon. Friend say whether these resignations have occurred in one particular area, or throughout the island?

Mr. Lennox-Boyd: They have occurred, I think, wherever Greek Cypriots are in a majority. They cover three-quarters of all the Turkish municipal councillors and, as far as I know, the only ones remaining are the seven Turkish members at Lefka, where they are in a majority on that council. That is my present information.

Trade Unionists (Detention)

Mrs. L. Jeger: asked the Secretary of State for the Colonies how many officials and members of the Cyprus Workers' Federation, which is affiliated to the International Federation of Free Trade Unions, are still in detention without trial in Cyprus.

Mr. Lennox-Boyd: I am asking Cyprus for this information and will furnish the figure as soon as I have the reply.

Situation

Mrs. L. Jeger: asked the Secretary of State for the Colonies if he will now make a further statement on the future of Cyprus.

Mr. Lennox-Boyd: No, Sir. I have no further statement to make today.

Mrs. Jeger: In view of the completely disappointing speeches from the Front Bench yesterday, can the right hon. Gentleman at least give the House an undertaking that there will be some statement on Cyprus before the House rises, and that he will not wait until Parliament has dispersed before making an announcement on any plans for the future of the island?

Mr. Lennox-Boyd: The hon. Lady knows more about yesterday's disappointments than I do.

Major Wall: Will my right hon. Friend undertake to give the maximum publicity to the important statement made from the Opposition Front Bench yesterday that, in the event of a Socialist Government controlling this country, there would not be Enosis until after a long perod of probation?

Mr. Lennox-Boyd: Yes, Sir. It is already being widely pondered.

Oral Answers to Questions — SEYCHELLES

Financial and Fiscal System (Commissioner)

Mr. Swingler: asked the Secretary of State for the Colonies on what date a Commissioner was appointed to examine the financial and fiscal system of the Seychelles; whom he has appointed; and what terms of reference have been laid down.

Mr. Profumo: I am glad to say that Sir Rex Surridge accepted this appointment on 11th July. His terms of reference will be
to advise on financial administration and financial and fiscal policy and to carry out a revision of structure, salaries and conditions of service of the Civil Service".

Mr. Swingler: While I welcome this appointment and wish well to the Commissioner who has been appointed, may I ask if the Under-Secretary is aware that those of us on this side of the House who have been concerned about the Seychelles in the past are not satisfied that this is adequate; and that we still feel that an independent commission of inquiry into the whole governmental and administrative system of the Seychelles is necessary to prevent further maladministration?

Mr. Profumo: As I have told the hon. Gentleman before, I do not accept his allegations. I really think that we ought to take one step at a time. Let us wait for the Commissioner's Report, and then, no doubt, the hon. Gentleman will find the chance to vent his feelings once again.

Oral Answers to Questions — GIBRALTAR

Port Development Plan

Mr. G. Jeger: asked the Secretary of State for the Colonies whether he will make a statement on port development plans for Gibraltar.

Mr. Profumo: Further progress has been made on the oil bunkering side, as the oil company concerned has stated that it is now in a position to join in the scheme. The Governor came to London recently for further talks about the port development plan, and we hope that all the arrangements will very shortly be completed.

Mr. Jeger: Will the hon. Gentleman make all facts public in Gibraltar itself where there is a considerable amount of anxiety about future development? Will he realise that people in Gibraltar are exercising extreme patience under conditions of siege economics?

Mr. Profumo: I think that the question of making all the facts available is for the Governor, but I am going to Gibraltar myself in the not-too-distant future and I shall have a look at the matter.

Oral Answers to Questions — NYASALAND

African Workers

Sir L. Plummer: asked the Secretary of State for the Colonies the number of Africans in Nyasaland who have been recruited annually for the years 1955–57 to work in Northern Rhodesia, Southern Rhodesia and the Union of South Africa, respectively.

Mr. Lennox-Boyd: I am asking the Governor to provide the details requested, and I will circulate them in the OFFICIAL REPORT.

Sir L. Plummer: If the figures show that there is a continuance of the matriarchal state in Nyasaland because of the absence of a large proportion of the male population, will the right hon. Gentleman consider how to get the men gainfully employed in Nyasaland itself?

Mr. Lennox-Boyd: I think it will be found on examination that the matriarchal system is even older in the Union of South Africa.

Sir L. Plummer: Does the right hon. Gentleman say that because a thing is older it is necessarily better?

Mr. Lennox-Boyd: I should hesitate to say that control by women was necessarily wrong, particularly after yesterday.

Workers (Rations)

Mr. Pargiter: asked the Secretary of State for the Colonies the calorific content of the food ration valued at 4d. a day allotted to agricultural labourers in Nyasaland; and the number of industrial firms who provide a free midday meal without a deduction from pay.

Mr. Profumo: I am asking the Governor for this information and will circulate it in the OFFICIAL REPORT in due course.

Mr. Pargiter: Does not the Minister think that it should be part of his responsibility to see that the real value of the food which can be obtained for this very low amount is adequate for nourishment, and ought not all these factors to be in the possession of the Colonial Secretary's Department?

Mr. Profumo: I am anxious to give the hon. Gentleman accurate and up-to-date figures.

Dr. Summerskill: Will the Minister when circulating the figures also circulate the morbidity and mortality rate?

Mr. Profumo: If that is not too complicated.

Oral Answers to Questions — SINGAPORE

Strikes

Mr. Awbery: asked the Secretary of State for the Colonies what steps are being taken by the Government of Singapore to investigate the causes of the recent industrial unrest; how many strikes have taken place during the past six months; and if he will make a statement.

Mr. Lennox-Boyd: I am consulting the Governor and will write to the hon. Member.

Mr. Awbery: Is the right hon. Gentleman aware of the spate of strikes that have taken place in Singapore? Is it possible that the conciliation machinery is not so well known as it might be, and will he take steps to make it known to the workers in this Colony?

Mr. Lennox-Boyd: I think that the explanation of the hon. Gentleman is an unlikely one. Nonetheless, I prefer to wait for the Governor's comments.

Port Commission (Membership)

Mr. Awbery: asked the Secretary of State for the Colonies what steps have been taken to prepare a scheme of registration and decasualisation of the port workers of Singapore as a means of removing the present industrial unrest.

Mr. Lennox-Boyd: The Singapore Government have recently appointed a Port Commission, one of whose terms of reference will be to examine and report on the desirability of establishing a separate Dock Labour Authority to be responsible for the supply of labour for the waterfront and to advise on the organisation and functions of any such body.

Mr. Awbery: Cannot the Minister draw the attention of the Commission to the position in this country, because a great deal of the trouble is the casual character of the labour? If he wants to remove the cause of the trouble at the docks in Singapore, could not there be introduced a system of decasualisation of labour, similar to that which we have in this country?

Mr. Lennox-Boyd: I will circulate the names of the Commission. After reading them I do not think that the hon. Gentleman will feel that it is necessary for me to draw their attention to any such matter.

Following are the names of the Members of the Commission.

Chairman:

Sir Eric Millbourn—Honorary adviser on ports to the Ministry of Transport and Civil Aviation.

Members:

Mr. Francis H. Cave, lately General Manager of Mersey Docks and Harbour Board.
Sir Ian Parkin—formerly General Manager of the National Dock Labour Board.
Mr. Colin C. Black, formerly a Director of Messrs. Furness Withy &amp; Co. Ltd.
Mr. W. H. McNeill, a director of the Straits Steamship Co. Ltd.
Mr. Y. C. Chang, Secretary of the Singapore Chinese Shipping Association.
Mr. S. Jagarathan, President of the Singapore Trades Union Congress.
Mr. Kenneth A. Seth, Legal Adviser to the Commission.

Oral Answers to Questions — TELEPHONE COMMUNICATIONS (INTERCEPTION)

Mr. Lipton: asked the Prime Minister when he expects to receive the report of the three Privy Councillors on the subject of telephone tapping.

The Prime Minister (Mr. Harold Macmillan): I cannot yet say when the Committee will report.

Mr. Lipton: I thank the right hon. Gentleman for that disappointing reply. If we are to discuss telephone tapping before we rise for the summer Recess, ought not the Report to be in the hands of hon. Members not later than the end of next week? Is it desirable that this odious thing should be allowed to fester for another three months until the House reassembles?

The Prime Minister: The Committee, which has, I think, the general confidence of the House and the country, is operating with great rapidity. It was appointed on 29th June, it had its first meeting on 3rd July, it has had seven formal meetings as well as a number of informal meetings, and I think that we should be grateful to the Committee for the work that it is doing.

Oral Answers to Questions — EUROPEAN FREE TRADE AREA

Mr. Osborne: asked the Prime Minister if, in the light of decisions reached at the Conference of Prime Ministers, he will give an unqualified assurance to British agriculture that the protection and safeguards it now enjoys will in no wise be whittled away under the European Free Trade proposals; and if he will make a statement.

The Prime Minister: The view of Her Majesty's Government has throughout been that the provisions of a Free Trade Area in Europe could not extend to agricultural products. This was clearly stated in our proposals to the Organisation for European Economic Co-operation which were published as Command Paper No. 72.

Mr. Osborne: While first thanking my right hon. Friend on behalf of the farmers of this country for that assurance, may I ask him whether his assurance will be brought to the attention of those European Ministers who suggested that the European Free Trade Area cannot succeed unless agriculture were included?

The Prime Minister: Our position has always been clear from the date of our declaration. Our position on this is, of

course, well known to our European friends and I do not think that there has been any variation from it since the very beginning.

Mr. Gaitskell: Is it not the case that the French Foreign Minister recently declared that a Free Trade Area excluding agriculture would be impossible from the point of view of France? Has the Prime Minister or the Government received any official intimation that this is the view of the French Government and can the Prime Minister say what discussions are going on on this matter?

The Prime Minister: I have received no intimation as to the official view of the French Government. Negotiations are taking place at the official level and, I hope, will be transferred to the Ministerial level at the appropriate time.

Mr. E. L. Mallalieu: asked the Prime Minister why he does not suggest that the countries of the Commonwealth should join the proposed Free Trade Area in the same way as is proposed for the French overseas territories.

The Prime Minister: The Treaty of Rome establishing the European Economic Community provides for the association with the Community of the overseas territories of the countries concerned. As regards the proposed Free Trade Area, these questions have been discussed with representatives of Colonial Governments and the general view seems to be in favour of excluding Colonial Territories. Any question of the association of independent Commonwealth countries with the Free Trade Area would, of course, be a matter for them.

Mr. Mallalieu: Would not the right hon. Gentleman agree that, if we stand outside this movement towards European integration in economic affairs, our industries are bound to suffer, and that, if our industries suffer, agriculture must suffer also, as well as Commonwealth producers who are accustomed to trade with us? Is it not, therefore, incumbent upon the right hon. Gentleman and his Government, in view of the statement by the French Foreign Minister referred to just now by my right hon. Friend the Leader of the Opposition, to make some suggestion to overcome the difficulty of overseas territories?

The Prime Minister: No, Sir. I think that the hon. Gentleman is confusing positions which are sometimes taken at the beginning of a negotiation with what one hopes may be the ultimate result.

Oral Answers to Questions — MINISTERS (ADMINISTRATION AND POLICY)

Mr. Shinwell: asked the Prime Minister whether he will instruct members of the Cabinet and other Ministers in charge of Departments to consult with hon. Members of all parties on appropriate occasions on subjects of important national interest involving policy and administration.

The Prime Minister: Administration and the formulation of policy are the responsibility of the Government. In discharging this responsibility it is the duty of Ministers to take account of public opinion throughout the country on important matters affecting the national interest, and I am confident that they will continue to do so.

Mr. Shinwell: Is the right hon. Gentleman not aware that, occasionally, Ministers encounter difficulties, while, at the same time, hon. Members have spells of inactivity, and would it not be desirable for there to be contacts on such occasions? Is the Prime Minister not aware that there reside great quality, talent and knowledge among hon. Members, and would it not be desirable occasionally to have consultations on important subjects, for example on the subjects of defence, foreign policy and the like?

The Prime Minister: I should have thought that the right hon. Gentleman, with his long experience in the House, would know that contacts between Ministers and hon. Members are very close, and always have been, unofficially as well as officially. There are many occasions for debate and discussion and Question and Answer. I should not have thought that the spells of inactivity of private Members to which he refers were quite so prolonged as he seems to suggest.

Mr. Nicholson: Has my right hon. Friend noticed the remarkable self-denial of the right hon. Member for Easington (Mr. Shinwell), in that he speaks of hon. Members and not right hon. Members?

Mr. Shinwell: Would not the right hon. Gentleman agree that my characteristic modesty, which has been noted by the hon. Member for Farnham (Mr. Nicholson), deserved more consideration?

Oral Answers to Questions — LOCAL AUTHORITIES (CAPITAL EXPENDITURE)

Dame Irene Ward: asked the Prime Minister if he will consider the setting up of machinery to ensure that local authorities with a good financial record for controlling expenditure and sound management of raising finance for capital expenditure shall be permitted to increase their standards of buildings and housing accommodation without interference from Departments which have also to sanction capital expenditure by less prudent local authorities, thus ensuring that incentives are offered to those authorities which spend wisely and economically.

The Prime Minister: The capital investment of local authorities is such an important element in our economy that some central control cannot be dispensed with. Proved competence and prudence naturally influence Ministers in considering applications for loan sanction; but it may well be necessary in the national interest to ask the most prudent of authorities to defer a capital project for the time being.

Dame Irene Ward: I thank my right hon. Friend for that Answer, but is it not a fact that Government Departments do suggest to local authorities putting in plans that they might prune the plans to the minimum standard, and would it not be a good idea that local authorities which have got a sound record of finance and are not profligate in their expenditure should have the opportunity of demonstrating to those residing within their boundaries that sound administration enables local authorities to raise standards? Is not it a bad thing always to have people brought down to a minimum, when the whole idea of the country is to improve quality and give incentives for good, sound administration?

The Prime Minister: I find it rather difficult to take the discussion further upon these highly generalised terms. If there is some particular instance which my hon. Friend has in mind, I shall, of


course, try to look into it. I understand that we are to have two days of discussion upon the whole subject of the relations between central Government and local government, and perhaps that would be a good occasion on which these principles might be ventilated,

Oral Answers to Questions — SECET SERVICE (ANNUAL EXPENDITURE)

Mr. Emrys Hughes: asked the Prime Minister if, in view of the greatly increased cost of the Secret Service in recent years, he will remit to the committee now considering telephone tapping the duty of inquiring into how far the £5 millions annual expenditure on the Secret Service is justified.

The Prime Minister: No, Sir.

Mr. Hughes: Is the Prime Minister not aware that that Answer is worthy of the Secret Service itself? Does he realise that an enormous number of telephones can be tapped for £5 million a year? Further, is the right hon. Gentleman aware that the Secret Service bill has gone up by £2 million a year under the present Government, and does he not think that others besides the Prime Minister, such as the Privy Councillors, could very well see if some economies could be effected here?

The Prime Minister: I do not grudge the hon. Gentleman his prepared impromptus, which we always enjoy; but his figures are inaccurate. The amount of the Secret Service expenditure has remained the same for the last five years.

Oral Answers to Questions — TANGANYIKA

Cultivated Land

Mr. Sydney Irving: asked the Secretary of State for the Colonies the proportion of cultivated land in Tanganyika which is farmed by Europeans and Africans, respectively; the proportion of the territory which is at present under cultivation; and the number of African farmers who are growing the main cash crop of Tanganyika, sisal.

Mr. Profumo: I am consulting the Governor of Tanganyika and will circulate the information in the OFFICIAL REPORT.

Mr. Irving: Would the hon. Gentleman not agree that there is an inordinately high proportion of cultivated land in the hands of non-Africans? Will he also bear in mind the remarks of the Economist of 29th June that a generous and constructive land policy is vitally necessary and would be in the interests not only of Africans but of non-Africans? Will he do everything he can to bring this initiative about?

Mr. Profumo: I am consulting the Governor only because I myself do not know what the proportion is and, therefore, I would not venture to go as far as the hon. Gentleman.

RENT ACT (PRESCRIBED FORMS)

The following Question stood upon the Order Paper:

Lady GAMMANS: To ask the Minister of Housing and Local Government what further steps he is taking to see that all the forms mentioned at the end of the pamphlet, entitled "The Rent Act and You," are readily available on the bookstalls.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke): I will, with permission, Mr. Speaker, answer Question No. 98.
The Rent Act does not place on me a statutory obligation to make available forms prescribed under the Act. What the Act does require me to do is to prescribe what should be in the forms. This I did by Statutory Instrument No. 981 of 1957. I made this Instrument at the earliest possible time on 6th June, immediately after the Act received Royal Assent. Copies of the Instrument, setting out the contents of the forms, were in the Vote Office and on sale in Her Majesty's Stationery Office on the following morning, 7th June.
There is no copyright in the content of these forms. Anyone is at liberty to reproduce and distribute them.
There is only one form which must be served not later than 17th August. This is Form T, not Form G, as suggested in the House yesterday. It is the notice of tenants' improvements affecting gross or


rateable value, and the number of people needing to serve this notice will be small.
All the forms are being printed by law stationers and other printers, who make their own arrangements for distribution through the usual trade channels.
So far as printing is concerned, I have no reason to doubt that supplies will be adequate to meet all demands. Information reached me last week that distribution all over the country was going too slowly, and at once I took various measures to improve this.
At my request, the Stationers' Association and the Booksellers' Association has taken steps to urge its members to have the forms on sale and to display notices to that effect. Some of the very large retailers have arranged to have a number of the forms on sale not only in their bookshops, but also on railway bookstalls. The Stationery Office is now selling the forms at their retail bookshops, and Forms A and G, which are those likely to be most in demand, will be available in most towns at Citizens' Advice Bureaux.

Lady Gammans: I thank the Minister very much indeed for his very full statement about these forms. I am sure that all those who have been anxious about the matter will be very pleased.

Mr. Mitchison: Is the right hon. Gentleman aware that there is still very real difficulty in getting the forms? May I suggest to him that the price is excessive, that the forms ought to have been available at the Stationery Office immediately, and that the best plan would have been to distribute them free of cost through council or post offices?
Is the right hon. Gentleman aware, too, that, though he has no formal statutory responsibility, it is his administrative responsibility to make the Act work if he sponsored it, as he did, and that the shortage of the forms at present is leading to people making and using their own forms in what they think is the correct style but which are, in fact, incorrect and invalid, and that this will simply lead to trouble later? Cannot the right hon. Gentleman do anything by way of free distribution through council or post offices?

Mr. Brooke: I want to shoulder my full responsibility in this matter. I

pointed out to the House that there is no statutory obligation on me. However, I took action, in fact, several days before the matter was raised in the House. I am sorry I was not here yesterday, but no notice whatsoever was given to me.
There is no monopoly in the production of these forms. From the time that the regulations were published, anyone was at liberty to produce and distribute them. With regard to what the hon. and learned Gentleman has just said, that some of the amateur productions may be invalid, I would point out to him that the regulations refer to
The forms contained in the…Schedule to these regulations, or forms substantially to the same effect…
I have followed the practice which, I think, has been universal under all Governments, that whereas the Stationery Office prints the regulations and shows what forms are prescribed, it is left to printers of all kinds or private people who wish to do so to produce the law forms. What has gone wrong on this occasion, I consider, is that there has been an underestimate of the rate at which demand—[HON. MEMBERS: "Hear, hear."]—not an underestimate of the demand, but an underestimate of the rate at which the demand would build up even though there are a good many weeks before any of these forms need be sent in. I think I have given the House a comprehensive account of the actual steps that I have taken to improve the situation as rapidly as possible.

Mr. Mitchison: With regard to the invalidity of the forms, is the right hon. Gentleman aware that his regulations require the notes to be appended to the forms and that the meaner or more ignorant landlords—not always only those—are omitting the notes which are for the benefit of tenants, and, consequently, are invalidating the forms?

Mr. Brooke: It is not for the hon. and learned Gentleman or for me to judge in advance what is valid or invalid. What I am pointing out is that the regulations for which I am responsible refer to
The forms contained in the…Schedule to these regulations, or formś substantially to the same effect…

Mr. Lewis: Is the Minister aware that as recently as last weekend I went to six of the principal booksellers in the country


but was unable to get the form, and that as recently as yesterday my hon. Friend the Member for Lewisham, North (Mr. MacDermot) telephoned six stationers all of whom said that they had not got the form and that, if they could get it, it would not only cost 6d. but that there would be an additional 25 per cent. Purchase Tax? Does not the right hon. Gentleman think it disgusting— [Laughter.]—this is no laughing matter—that the Government should make old-age pensioners travel all round London to get a form for which they have to pay 6d. and then 25 per cent. Purchase Tax in addition? Will he have the form produced free of charge and circulated to local authorities, Citizens' Advice Bureaux and Members of Parliament, and, if need be, get the national newspapers to publish it, so that people will be able to obtain the form easily and readily from these various sources?

Mr. Brooke: I think that the action which I have already taken will very quickly secure that the forms will be available practically everywhere. [HON. MEMBERS: "No."] With regard to them method of production of the form, I have followed the practice which has been followed by all previous Governments of all colours. I have explained to the House that anybody who wishes to reproduce one of the forms is at liberty to do so. There is no copyright whatever.

Dame Irene Ward: Would it not be a good idea to have the forms available in post offices? However well the distribution is carried out through the Stationery Office, is it not likely to be a rather complicated procedure for people who are not particularly used to filling in forms? Will my right hon. Friend bear in mind that I think it would be helpful to the public if the forms could be available in post offices, where they are likely to have a very much wider distribution than in other places?

Mr. Brooke: I think that I have shown that I am anxious to be as helpful as possible. This is not a matter of filling in forms, but of obtaining the forms, and I am somewhat reluctant to add to the considerable burden of work which post offices already have to carry.

Mr. Shinwell: Would the right hon. Gentleman answer the allegation made

by my hon. Friend the Member for West Ham, North (Mr. Lewis) that not only does the form cost 6d., which appears to be excessive and must be an excessive price for many people affected, but that, in addition, there is a Purchase Tax? Surely that is something quite unusual. Will the right hon. Gentleman see that Purchase Tax is not charged on the form?

Mr. Brooke: Purchase Tax has always been chargeable on all law forms that have been produced under all Governments, under all Acts since Purchase Tax was invented, but there is no monopoly whatever in the production of these forms. Anyone can have one of these forms typed or duplicated.

Mr. H. A. Price: Would it not be a good idea to get the Stationery Office to produce some of these forms? I am quite sure that they could then be sold for less than half the 6d. which is being charged for the Solicitors' Law Stationery form?

Mr. Brooke: As I say, I have followed precedent. What has gone wrong here has been nothing to do with the production of the forms, but with their distribution.

Miss Bacon: Could the right hon. Gentleman say why the forms are costing as much as 6d., even without Purchase Tax? Is he aware that this morning the Labour Party Publications Department, because of the shortage of these forms, decided to go ahead and print a quantity, that they will be ready in two days' time and the cost in bulk supply will be under Id., including Purchase Tax?

Hon. Members: Resign.

Mr. Speaker: Order. Hon. Members should have a sense of proportion.

Mr. Brooke: I am very glad if political parties or any other organisations help to make these forms available, but I should have thought that the hon. Lady the Member for Leeds, South-East (Miss Bacon) would realise that in the retail price the major factor is not the cost of production but the cost of distribution.

Mr. Blenkinsop: Is the right hon. Gentleman aware that in my constituency hundreds of tenants have received quite false notices, as far as I can see, duplicated by landlords, because of the lack of


forms no doubt, which include none of the essential relevant matters that are on the forms? I have a copy in my possession now. Is he aware that tenants, by lack of knowledge, may be involved in paying rent increases quite wrongly on the basis of this sort of nonsense that has been issued? Will not the right hon. Gentleman accept full responsibility for this fact, which makes complete nonsense of any talk about any defence of the tenant?

Mr. Brooke: I cannot accept that for one moment. I have published these regulations and I have set out in the regulations the contents of the forms. I have indicated that these forms,
… or forms substantially to the same effect…
will be valid. It is not for the hon. Member or for me to judge in advance whether the particular form which he holds in his hand is valid.

Mr. Gaitskell: May I ask the right hon. Gentleman whether he will reconsider his attitude in this matter? He will be aware that there is a general feeling in the House that these forms ought to be made available through post or council offices, if possible, free. Will the right hon. Gentleman look at the whole matter again with a view to providing them in that manner, if necessary at the small cost at which my hon. Friend the Member for Leeds, South-East (Miss Bacon) said the Labour Party is prepared to supply them?

Mr. Brooke: In my original statement, I endeavoured to inform the House that I was extremely anxious to do everything in my power to facilitate and expedite the distribution. It is perfectly possible, as far as I am aware, for local authorities to handle these forms, though I doubt whether they would have power to incur net expenditure. [HON. MEMBERS: "Oh."] The powers of local authorities in these matters are limited and a local authority must be expected to cover its costs; but subject to that I am prepared to do all in my power to expedite the distribution of these forms. I would say again that this is not a problem of production, but one of distribution.

Mr. Jay: Is the right hon. Gentleman aware that, after speaking to his office last weekend, I went, on its advice, to most of the bookshops in Charing Cross

Road and most of the railway bookstalls in Central London and found that not one of them had a single copy of this form? How could ordinary constituents possibly obtain one in those circumstances? Will the right hon. Gentleman take seriously the suggestion made by his hon. Friend the Member for Lewisham, West (Mr. H. A. Price)?

Mr. Brooke: It was certainly possible last week to obtain copies of the form much nearer than Charing Cross Road. [HON. MEMBERS: "Where."] In Victoria Street. But it was entirely because of the difficulty which I found was being experienced last week that I took this comprehensive action, which I think the House will find will very quickly remedy all the trouble.

Mr. H. Morrison: Surely the Minister must have known that the Rent Act was a highly controversial Act and would affect large numbers of people. Did the right hon. Gentleman underestimate the consequences of the Act in the number of places that would be involved? Did he take no steps to see that the administration of the Act and the supply of forms was adequate? Ought he not now, in view of the revelations made, to see that the forms are available to the post offices and local authorities? Surely the right hon. Gentleman can supply them to local authorities without involving a charge on local rates. If the Minister is in such a muddle with his forms and the administration is clearly out of gear, ought he not to bring in a Bill either to repeal or to postpone the Act?

Mr. Brooke: No, Sir. I am in no muddle, and I underestimated nothing. [HON. MEMBERS: "Oh."] What I think was underrated was the speed at which the demand for these forms would build up, bearing in mind that none of them need actually to be returned for a good many weeks ahead. I am giving the House an undertaking that these forms will be available to everybody. [HON. MEMBERS: "Where?"] Everywhere. They will be available long before the date at which anybody can possibly lose anything by not having sent in a form.

Mr. Isaacs: Did the right hon. Gentleman also underestimate the speed at which the landlords would ask for more rent?

Mr. Brooke: As I said, I underestimated nothing at all.

Several Hon. Members: Several Hon. Membersrose—

Mr. Speaker: I really think that we have had a good run on this Question.

Mr. M. Stewart: The Minister has said that local authorities would not be allowed to incur a net charge in distributing these forms free. If that is so, can he not himself make available forms free to local authorities, so that they can distribute them free to the public without incurring a charge?

Mr. Brooke: I cannot say in advance what a local authority is empowered to spend money on; only the courts can say that. What I am saying is that I can see no objection to a local authority handling these forms, and distributing them, provided that it covers its costs.

Mr. Gaitskell: Will the Minister answer this simple question? Why should he not arrange for these forms to be printed by the Stationery Office, as suggested by one of his hon. Friends, and distributed free to local authorities, so that tenants can get them easily?

Mr. Brooke: Because I think that the steps I have taken already will make any printing by the Stationery Office quite unnecessary.

Hon. Members: Resign.

Mr. Speaker: Order. Mr. Gibson.

Mr. Gibson: Is the Minister aware that in spite of the action which he says he took last week, only this morning I have been informed from a number of places in London that people cannot get Form G? Does not that prove the justice of the complaint that there is very great difficulty in the tenants getting these forms? Is the right hon. Gentleman not aware that the country will regard him as the Minister who pushed this Bill through, was responsible for the Act, and, having got it through, has not made proper arrangements for a speedy supply of the necessary forms?

Mr. Brooke: I am quite sure that within a very short time, thanks to the steps which I have taken, supplies of these forms will be available to anybody who wants them.

Hon. Members: Resign.

Mr. Speaker: Order.

BUSINESS OF THE HOUSE

Ordered,
That the Finance Bill, as amended, may be considered immediately after the re-committal of the Bill and Report thereof, notwithstanding the practice of this House as to the interval between the stages of such a Bill.—[Mr. Heath.]/

Orders of the Day — FINANCE BILL

Order for consideration, as amended, read.

Motion made, and Question proposed,
That the Bill be re-committed to a Committee of the whole House in respect of the Amendment to Clause 29, page 22, line 30, standing on the Notice Paper in the name of the Chancellor of the Exchequer.—[Mr. Powell.]

Question amended, by adding, at the end:
and in respect of the Amendments to Clause 35, page 28, lines 8 and 13, standing on the Notice Paper in the name of Mr. Harold Wilson, and in respect of the Amendment to Clause 35, page 28, line 20, standing on the Notice Paper in the name of Mr. Mitchison "—[Mr. Mitchison.]
and, as amended, agreed to.

Bill immediately considered in Committee.

[Sir GORDON TOUCHE in the Chair]

Clause 29.—(ANNUAL DETERMINATION OF STATUS, AND PROVISIONS ON CHANGES OF STATUS.)

3.55 p.m.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell): I beg to move, in page 22, line 30, at the end to insert:
(3) Where a company which has not qualified as an Overseas Trade Corporation in the period of twelve months beginning with the sixth day of April in any year, but which has so qualified in a previous period, only failed so to qualify in the said period of twelve months because of transactions carried out by it in that period which were, having regard to the activities of the company as a whole, of a minor nature, and relief would, apart from this subsection, be allowable under the Income Tax Acts in respect of a loss sustained by the company in the said period of twelve months in carrying on a trade, or in respect of capital allowances falling to be made in charging the profits or gains of such a trade for the year of assessment comprised in the said period of twelve months, against income tax charged on income of the company which, if it qualified as an Overseas Trade Corporation, would be investment income, then if it appears to the Commissioners of Inland Revenue that the sole or main benefit which the company would derive horn not so qualifying in the said period of twelve months would be the allowance of that relief, together with any corresponding reduction of the liability of the company to the profits tax, they may direct that no such relief shall be given and that the loss or the capital allowances in respect of which it would have been given shall be left out of account for all the

purposes of the Income Tax Acts and of the enactments relating to the profits tax.
(4) A company which is aggrieved by the refusal of the said Commissioners to give a direction under subsection (2) of this section or by their giving a direction under subsection (3) of this section may, by notice in writing to that effect given to the Commissioners within thirty days from the date on which notice is given to the company of the refusal or, as the case may be, of the direction, require the question whether a direction ought to be given to be heard and determined by the Special Commissioners, and the Special Commissioners shall hear and determine the question in like manner as an appeal made to them against an assessment to income tax under Schedule D.
All the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.
The object of this Amendment is to make two improvements in this Clause which were suggested during the Committee stage. In its present form, the Clause provides that the Inland Revenue may disregard minor acts or occurrences which would disqualify a company from being an overseas trade corporation if, in its opinion, there was no material advantage to the company by so disqualifying itself. It was pointed out in Committee that it was unusual for this power to be given to the Commissioners without the right of an appeal, and, accordingly, an appeal against the refusal of the Commissioners to give such a direction is provided by the new subsection (4).
It was also pointed out that a company might disqualify itself, not inadvertently hut deliberately, in a particular year to gain a tax advantage thereby. I think that there was general agreement on both sides of the Committee that companies should not be able to disqualify themselves, or qualify at will from year to year, according to the particular tax advantage which they might thereby gain. Subsection (3) provides against that by giving the Commissioners a power to disregard, in the event of a company in their opinion deliberately disqualifying itself for such a purpose, the benefits of allowances which they would thereby gain. It thus provides a penalty and a means of preventing this form of avoidance. The appeal procedure provided in subsection (4) will also apply to this power of the Commissioners to give a direction.

Mr. G. R. Mitchison: We consider it not unreasonable to have an appeal in both the cases provided for here, and we generally welcome the new provision in subsection (3) and its intention.
I am bound to say that I have a little anxiety in this, as in another case to which we shall refer later, about the words used. They are that it must appear to the Commissioners
…that the sole or main benefit which the company would derive…
In moving the Amendment the Financial Secretary used slightly different words. He said "deliberately", and it seems to me that there are cases in which the Commissioners might be in some doubt about the sole or main benefit point, but might none the less have reason to suppose that it was a deliberate act on the part of the company.
Therefore, I wish the words could have been rather wider, though in the context of this Clause we hardly feel that that is a ground for objecting to it, and with the general principle that companies should not get benefit from deliberately disqualifying themselves, we entirely agree.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

Clause 35.—(INTERPRETATION OF PART IV.)

Mr. Mitchison: I beg to move, in page 28, line 8, at the end to insert:
recognised market" means a market declared by an order of the Board of Trade for the time being in force to be a recognised market for the purposes of this part of this Act".
This is a point about the recognised market, Sir Gordon, and perhaps it would be convenient to discuss with this Amendment the one to page 28, line 13, namely, in page 28, line 13, at the end to insert:
(2) No order shall be made by the Board of Trade under the last foregoing subsection except with the consent of the Treasury and an order so made shall be in the form of a statutory instrument and subject to annulment by a resolution of the Commons House of Parliament.

The Deputy-Chairman: Is it suggested that the first three Amendments to the Clause be discussed together?

4.0 p.m.

Mr. Mitchison: The first Amendment in line 8 and the one in line 13 go together. The second Amendment in line

8 is an alternative form. I understood that we were to discuss the first alternative, that is to say, the first Amendment in line 8 and the Amendment in line 13. However, I can, of course, refer to the other as well, that is to say, to the Amendment in page 28, line 8, at the end to insert:
recognised market" means a market declared by an order of the Board of Trade in the form of a statutory instrument, made with the consent of the Treasury, laid before Parliament and for the time being in force, to be a recognised market for the purposes of this Act".

The Deputy-Chairman: I think that it would be for the convenience of the Committee if all three were discussed together.

Mr. Mitchison: The first Amendment in line 8 and the Amendment in line 3 were moved earlier in Committee. I do not want to repeat too much of what was said then, but, of course, dealings on a recognised market are a very material factor in this part of the Bill and the Bill contains no definition of a recognised market.
If in error a company misconceives what is or what is not a recognised market, it may find itself disqualified accordingly. It is, therefore, important that the character of a recognised market should be made perfectly clear. What was suggested in Committee was that, having regard to the number of doubtful cases, the right course would be to give the Board of Trade power—and this is what the Amendment proposed—to declare what was and what was not a recognised market and to make Orders for that purpose. It was further suggested that if those Orders were made, they should be in the form of a Statutory Instrument laid before the House and subject to annulment in the usual way.
On that point, we had a very definite undertaking from the Government. I having moved the Amendment and given the reasons for it, the Economic Secretary to the Treasury said:
I am grateful to the hon. and learned Gentleman for moving the Amendment. He has made a very reasonable point. I think that there should be some closer definition of what the term means.
"Some closer definition" is a slightly odd way of putting it, because there is no definition in the Bill. He went on:
We do not want to accept his actual form of words, but we should like to consider the


matter further, before Report. It clearly is the duty of the Board of Trade to draw up the list, in consultation, of course, with the Treasury, Whether the device of a Statutory Instrument is rather too ponderous a one, I do not know, but if the hon. and learned Gentleman would be good enough to withdraw the Amendment, we will consider the matter and raise it again on Report.
With that definite undertaking to raise the matter again on Report, my right hon. Friend the Member for Huyton (Mr. H. Wilson) also made a short speech and ended by saying:
We welcome the fact that the Chancellor has made this small concession, and if it is the wish of the Committee, we shall be glad to withdraw the Amendment."—[OFFICIAL REPORT, 27th June, 1957; Vol. 572, c. 576–8.]
I then thanked the Economic Secretary and formally asked leave to withdraw the Amendment.
This is a case in which the Government gave a quite definite undertaking to raise the matter again. I have been scanning the Notice Paper from day to day waiting for the Government Amendment which was to raise the matter again. There being no Government Amendment on the Notice Paper, I have come to the conclusion that the Government are to carry out the undertaking which they gave to the Committee by accepting the Amendment which we put forward. If the Government say, in view of the last two or three sentences of the Economic Secretary's statement, that they do not like the Amendment in line 13 and propose to accept only the Amendment at line 8, I should feel that they had sufficiently carried out their undertaking.
However, I am bound to say, in face of that very clear statement, since they have not raised the matter as they undertook to do, that the only conclusion I can draw consistent with their carrying out their pledge is that they will now accept the Amendment. I do not wish to repeat all the arguments which were raised earlier. They appealed to the Government at the time and, quick though the Government are to change their mind, I cannot but think that that which convinced them earlier should convince them if it is repeated at this stage; it therefore seems a pity to repeat it.
I emphasise once again the importance to the Revenue, on the one hand, and to the taxpayer, on the other, of having a definition of a phrase which, if it

is misunderstood, will result in the disqualification of companies which ought to be qualified, and the qualification of companies which ought not to be qualified, and which will affect the character of their dealings in ordinary trade.
The remaining Amendment, the second in line 8, was put down as a compromise. It goes a little further than the first, but not quite as far as the other two taken together. It provides for declarations by the Board of Trade to be in the form of a Statutory Instrument, to be made with the consent of the Treasury—as no doubt it would be made, anyhow—and to be laid before Parliament, but it does not contain the power of annulment to which the Economic Secretary may have some objection.
I repeat, the Government are in honour bound in the circumstances of the case to accept the first of the Amendments or the second. I cannot see that they are in honour bound to accept the third, but that is a matter upon which we shall no doubt hear their considered views. If I refrain from the arguments which they found so convincing and accepted so cordially earlier, I do so only to save the time of the Committee, because I am sure that even the Government could not have changed their mind so quickly.

The Economic Secretary to the Treasury (Mr. Nigel Birch): The hon. and learned Member for Kettering (Mr. Mitchison) has given an accurate account of what happened when we were debating this matter earlier. Moved by his usual eloquence, I made the remarks to which he has referred. We undertook to consider this matter and to think whether it was right to do something on Report. We have examined the matter with very great care since then and considered the various alternatives.

Mr. Mitchison: I am sorry to interrupt the right hon. Gentleman, but it is important that these pledges should be honoured. The pledge was that the Government would consider the matter and raise it again on Report. That is to say, it was not merely a pledge to consider whether they would raise it on Report, but a definite pledge to do so. We all understood from the right hon. Gentleman that it was merely a question of the form of words.

Mr. Birch: Of course, we knew that the matter would be raised again on Report—even if we did not raise it ourselves—because the Amendment was bound to be called. I am giving the reasons which prompted us to act as we did.
The object of this provision—which is in line with what the Royal Commission wanted—is to ensure that overseas trading corporations can sell primary products in this country through brokers in terminal markets in the ordinary way without thereby losing their overseas trading corporation status and, at the same time, being put into a position in which they can evade taxation in any way. They are by this means put in much the same position as a company resident abroad, who can be charged to tax in this country in the name of an agent or factor but in whose case, by the provisions of the Income Tax Acts, a bona fide broker does not count as an agent or factor and therefore cannot be charged to tax in that way.
The object of the provision is to put overseas trading corporations into a similar position. The question that arises is one of procedure, namely, who should be responsible for determining this matter? Should it be the Board of Trade or some other Ministry, or should it be the Inland Revenue?
One of the troubles of putting the matter entirely into the hands of the Board of Trade—and this was a point which had not occurred to me when I replied to the hon. and learned Gentleman in Committee—is that many commodities which would be principally affected by this provision are agricultural products, such as tea. They are the responsibility of the Ministry of Agriculture, Fisheries and Food, in which case the Board of Trade would not be a very suitable Department to pronounce upon them.
It was, therefore, thought that it would be better to leave the matter in the hands of the Commissioners of Inland Revenue, with an appeal to the General Commissioners. There are a number of precedents for defining what we mean in general terms and then leaving it to the Commissioners of Inland Revenue to decide. For example, the question of what is an educational establishment for the purposes of taxation is not defined in

a list by the Ministry of Education; it is determined by the Commissioners, with an appeal to the General Commissioners. Another perfectly good precedent concerns the question of what, for tax purposes, is a bank carrying on a bona fide banking business. No list is drawn up by the Treasury and published in that case.
I do not think that the hon. and learned Gentleman is right in saying that it would put the companies at risk if there were no list, because if the mistake were a genuine one the company would be protected by Clause 29 (2). We feel that it is more in accordance with usual tax procedure to keep the Bill as it is, and we feel that the procedure will work and that no genuine difficulties will arise. Therefore, I must say, with much regret —and I should like personally to apologise to the hon. and learned Gentleman and to the Committee for going further in Committee than I ought to have gone—that after having considered the matter with very great care we have come to the conclusion that on the whole it is better to leave the provisions as they are.

Mr. Harold Wilson: The right hon. Gentleman should not apologise for having gone too far in Committee; he should apologise for not having gone far enough today. The answer which he has given is quite unsatisfactory, both as regards procedure and the policy question which is involved in the Amendment. Indeed, the more detail into which the right hon. Gentleman has gone in giving his reasons for rejecting the Amendment the more he has produced reasons why he should accept it.
I do not want to repeat all the arguments that we had in Committee; I want to deal with a particularly piffling and silly point which the right hon. Gentleman made towards the end of his speech. He said that some of these recognised markets are in food, and how could the Board of Trade know about markets in food? If he will consult the precedents he will see that what he has said does not add up at all. The Board of Trade does consult the Ministry of Agriculture, Fisheries and Food.
We know that the Cabinet is meeting this afternoon and that it is split on the question of postal charges, which is


probably why the Chancellor is not here, but surely the Government have not reached the point where Ministers are not speaking to each other, and officials are not ringing each other up or sending letters to each other. If the right hon. Gentleman will look at the procedure followed in the case of the monopolies legislation he will find that the Board of Trade was given the clear responsibility and duty of referring cases to the Monopolies Commission, some of which cases were within the purview of other Departments.
4.15 p.m.
Tea is the sort of commodity which the right hon. Gentleman had in mind as being under the aegis of the Ministry of Agriculture, Fisheries and Food. That commodity was referred to the Monopolies Commission by the Board of Trade. I have no doubt that it consulted the appropriate Ministry before doing so. When I referred the question of dental goods to the Commission there were consultations with the Ministry of Health—but we were then on speaking terms with each other.
It is very silly for the right hon. Gentleman to say that the Board of Trade can be responsible only for the items which come within its field. If he were to face that point, on consideration he would find that that is not one of the statutory duties of the Board of Trade. The whole of the Companies Act responsibilities involve action in respect of companies which, so far as parent Department responsibilities are concerned, fall elsewhere. I hope that the right hon. Gentleman will not try to persuade the Committee upon these lines, and also that that argument has not entered into the final decision which seems to have been taken by the Treasury.
The question of procedure was mentioned by my hon. and learned Friend. We would have pressed the matter much further in Committee, but for what the right hon. Gentleman said. We all thought that the argument used by my hon. and learned Friend and supported by myself carried conviction on both sides of the Committee. Who knows what a recognised market is, and who will now decide? We should probably all agree that the reason for this formulation is to preclude the possibility of overseas trading corporations selling to associated

organisations at prices which turn out to be unreal ones, for the purpose of tax evasion or avoidance. It is because of the difficulty of carrying out these provisions about armslength that this is necessary.
We agree with the right hon. Gentleman that if these overseas trading corporations sell to a recognised terminal market where neither the supplier nor the buyer has any predominant power to determine prices the price can be assumed to be a real and effective one for tax purposes. That is why it is said that the rubber market, the tin market and, so far as it exists, the raw cotton market, are real markets, and that whatever prices are quoted as being ruling prices they are the real ones and there cannot be any question of tax "fiddling."
That is all very clear, but there are these marginal cases which my hon. and learned Friend mentioned. He quoted the case of diamonds. Are they a recognised market? If the Bill is as clear as the right hon. Gentleman thinks, and if it does not require the Amendment, he should tell us whether diamonds are a recognised market for this purpose.
The right hon. Gentleman has muddied the waters considerably with his reference to recognised brokers, because that reference alters the whole position, as I am sure many of his hon. Friends will recognise.

Mr. Birch: The phrase "bona fide broker" is used in one of the Income Tax Acts.

Mr. Wilson: It may be that the phrase "bona fide broker," which is a usual phrase and appears in tax legislation, has different meanings in relation to one commodity market as distinct from another. When the right hon. Gentleman looks the matter up I think he will find that it means one thing in the case of some of these terminal markets, such as rubber, and another thing in relation to other markets. What about timber? I assume that that market was excluded as not being a recognised market. It is not a terminal market. There is no speculation, and no price is quoted each day. I think he will find that it will only confuse the issue if he talks about bona fide brokers in this way.
I mentioned in Committee the question of bulk buying, but no reference has been made to it this afternoon by the right hon. Gentleman. My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) was taking part in that debate, and we welcome him back to the Committee from his wire-tapping activities. Both he and I made the point on that occasion. If the Government mean business about Commonwealth trade they will have to reintroduce bulk buying.
In the one case where it still continues, which, as the right hon. Gentleman knows, is that of jute, does the Jute Control, which is responsible for buying raw jute, constitute a recognised market or not? Will O.T.C.s be free to sell to the control, or will it be said that the control does not comprise bona fide brokers and that this is not a recognised market?
The right hon. Gentleman says that this point has been fully considered. Would he therefore tell us what is the position about bulk buying and Government trading under the Clause as he wants to see it, unamended by my right hon. and learned Friend's Amendment?

Sir John Barlow: Before my right hon. Friend answers those questions, may I put one or two questions to him very much on this point? It is easy to recognise the ordinary brokers in most commodity markets, but there are instances in which produce or minerals are sold in this country other than through the recognised brokers, and they may cause a little difficulty.
The question of selling tea has been mentioned. Most of the tea brought from abroad is sold to recognised brokers, but some is sold through merchants' in the ordinary course of events and not through technically recognised brokers. In some of the smaller markets, too, not only of produce but of minerals, where the trade is too small for there to be a recognised market and an official broker, the imports are disposed of through recognised merchants and not, technically, through brokers in any sense of the word.
I think it is the intention of the Economic Secretary that these usual methods of selling through brokers or merchants should be covered, but I hope that he will make the position a little clearer.

The main point, I imagine, is that this produce is sold at arms' length to the best advantage in this country, whether it is technically through a recognised broker or through usual merchants through whom it has been sold for many years.

Mr. Birch: Replying, first, to my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow), I agree that many difficulties would arise in these cases, but the only way to solve them if there is no recognised market is to hive off that part of the business.
The right hon. Member for Huyton (Mr. H. Wilson) raised several points. I understand that in spite of bulk purchase the jute market would rank as a recognised market.

Mr. H. Wilson: Why?

Mr. Birch: Because it is a market which exists. The timber market would not so rank, because there is not a recognised market for timber. The Clause mentions "brokers in a recognised market." It does not refer to "a bona fide broker"; I quoted that phrase from another Act.

Mr. Mitchison: This is the most unsatisfactory answer which even this Government have produced throughout the Bill. They gave a perfectly clear undertaking, but they did not carry it out. I say no more about that, and I turn to the Economic Secretary's defence of what it is proposed to do.
What is his defence? First, there was this ridiculous point about tea. Tea was the very first example which I mentioned when I raised this subject in Committee. The right hon. Gentleman knows perfectly well that tea is not often grown in this country and that the activities of the Minister of Agriculture, Fisheries and Food in the matter of tea are, to say the least, somewhat limited. It is obviously a question for the Board of Trade.
What was the right hon. Gentleman's second argument? This seemed to me to be a complete misunderstanding of the difficulties to which he is putting people in this matter. He says that if a company makes a mistake, it is protected by Clause 29 (2), which refers to inadvertent acts, and in this way the company can be fished out of its difficulties. There


are two points about that. First, it is not an inadvertent act. The company is selling jute or timber or whatever it is, and there is no question of inadvertence; the company is doing what it intends to do, except that it does not know what is and what is not a recognised market. It will not be the only company which does not know.
Suppose that company A gets out of its difficulties under the provisions of what I call the slip subsection. What about company B, company C and company D? Is the fact that company A has made a slip, in thinking that the market in timber was recognised when, in fact, it was not recognised, to be published and are we to have a list in the country of what are and what are not recognised markets? If we are, it seems to me a ridiculous and absurd way of giving effect to what ought to be a simple administrative matter; but if we are not to have such a list, then every other company in the trade will be in complete ignorance and they will all have to slip up one after another, or half of them will have to slip up one after another, and be rescued individually and separately under a Clause which was not intended to cover this point at all and, in fact, does not cover it properly.
The plain English of the matter is that when a Government are taxing people they ought to make it clear what taxes they are imposing, on whom and in what circumstances. In this case, the question of the liability of a company to tax in selling commodities of the kind which it produces in this country depends in part on what is and what is not a recognised market. The phrase is the Government's phrase. It is an extremely difficult phrase to understand, and if they intend to keep it in the Bill it is their business to make clear to the taxpayer and to the companies concerned what they mean by it.
Two or three examples have been given today. We could think of many—jute, timber, diamonds, copper, sherry, and half a hundred other commodities. These people are sincerely and properly carrying on their trade in these commodities in the City of London. What are they to do about this Clause? How do they know what the Government or the Commissioners or anybody else mean by recognised markets unless they are told in the Act which uses the phrase and

imposes a liability which varies according to its meaning?
We have been told, "It is all right. Leave it all to the Commissioners of Inland Revenue". We have been told that the Board of Trade does not know enough about tea. How much more do the Commissioners know about tea than do the Board of Trade? I do not know what they will do. Will they consult all the Ministries concerned? Let us turn the right hon. Gentleman's point upon himself. If the Board of Trade is thought to be incapable of deciding what is a recognised market and what is not, by what singular virtue are the Commissioners of Inland Revenue qualified to do it? This is a piece of bureaucratic arrogance from that point of view, and from the point of view of legislation it is a case of a Government including a vague phrase in a Bill and leaving companies to take their chance on the meaning which may be given to it by people who have no particular qualifications to give it a meaning.

Commander C. E. M. Donaldson: On a point of order. I have been in the Chamber for less than a minute, because the clock has not moved since I arrived. The hon. and learned Member for Kettering (Mr. Mitchison) has fixed his eyes on me and has concentrated his argument on me all that time. He has not been concentrating on the Government, to whom he should be addressing his remarks.

The Deputy-Chairman: Hon. Members should address their remarks to the Chair.

Mr. Mitchison: I am sorry, Sir Gordon. I can only assure the hon. and gallant Member for Roxburgh, Selkirk and Peebles (Commander Donaldson) that it was undoubtedly the unconscious attraction of his countenance which induced me to do it.

4.30 p.m.

Mr. H. Wilson: Is this matter to go unanswered by the right hon. Gentleman? The Bill uses the phrase, "recognised market". But it has no meaning in the English language unless we know by whom the market is recognised. The right hon. Gentleman says, "recognised by the Board of Inland Revenue", but the Bill does not say so.
This phrase could give rise to considerable litigation and there could be great uncertainty during the operation of the Act. One can imagine cases going before the Special Commissioners and to the High Court, all because of the right hon. Gentleman's laziness in not dealing with the point adequately. The whole Committee must bear the responsibility if the time of companies and of the Board of Inland Revenue is involved in litigation as the result of this slipshod drafting.
The right hon. Gentleman ought to be the first to realise that the phrase causes very great uncertainty. I have heard commodity traders say that they do not know whether they are covered by this phrase or not. The right hon. Gentleman did not answer any of the references made by my hon. and learned Friend the Member for Kettering (Mr. Mitchison) or myself to such markets as diamonds, shellac and some of the rather small, specialised markets.
I think that they would be called "recognised" markets in the sense that if we look at the excellent book by Sir Oscar Hobson, "How the City Works", we find a description of them and they therefore take their places on the map. Whether Sir Oscar Hobson is to be the authority on this matter or anyone else is a very arguable proposition. Is there a market in furs? There are auctions.
We are told that, in the end, the unfortunate inspectors of taxes will have to decide these matters for themselves. One of the curses of the Bill, as we have said many times, is that it places more responsibility on the tax inspectors, who have quite enough work to do and who

already, because of the unfortunate legislation which they have to operate, have to discharge far too much discretion in matters on which legislation should be clear. The Bill would put on them the responsibility of deciding what is and what is not a recognised market.

If the right hon. Gentleman goes on like this he will get a reputation rather similar to that already enjoyed by the Minister of Housing and Local Government, who wasted the time of the House earlier this afternoon for about half an hour because he could not accept a proposition which anyone in his senses would have accepted. But I should be out of order if I developed that point further.

By refusing to accept the Amendment, the right hon. Gentleman is creating great uncertainty, and unless he proposes to tell us that he will accept the Amendment or will, at the very least, publish for the benefit of the Committee and, possibly, for debate a clear list of what the Board of Inland Revenue will accept as recognisd markets, we shall have no alternative but to carry this Amendment to a Division. Hon. Gentlemen who have followed the debate, including the hon. and gallant Member for Roxburgh, Selkirk and Peebles (Commander Donaldson), who came into the Committee a few minutes ago, will recognise that on the merits of the case there is nothing in the Economic Secretary's argument at all.

Question put, That those words be there inserted:—

The Committee divided: Ayes 212, Noes 276.

Division No. 164.]
AYES
[4.34 p.m.


Ainsley, J. W.
Brockway, A. F.
Dalton, Rt. Hon. H.


Albu, A. H.
Brown, Rt. Hon. George (Belper)
Darling, George (Hillsborough)


Allaun, Frank (Salford, E.)
Brown, Thomas (Ince)
Davies, Ernest (Enfield, E.)


Allen, Scholefield (Crewe)
Burke, W. A.
Davies, Harold (Leek)


Awbery, S. S.
Butler, Herbert (Hackney, C.)
Davies, Stephen (Merthyr)


Bacon, Miss Alice
Butler, Mrs. Joyce (Wood Green)
Deer, G.


Bellenger, Rt. Hon. F.J.
Callaghan, L. J.
de Freitas, Geoffrey


Bence, C. R. (Dunbartonshire, E.)
Carmichael, J.
Dodds, N. N.


Benson, G.
Castle, Mrs. B. A.
Donnelly, D. L.


Beswick, Frank
Champion, A. J.
Dye, S.


Bevan, Rt. Hon. A. (Ebbw Vale)
Chapman, W. D.
Edelman, M.


Blackburn, F.
Chetwynd, G. R.
Edwards, Rt. Hon. John (Brighouse)


Blenkinsop, A.
Clunie, J.
Edwards, Rt. Hon. Ness (Caerphilly>


Blyton, W. R.
Coldrick, W.
Edwards, Robert (Bilston)


Boardman, H.
Collick, P. H. (Birkenhead)
Edwards, W. J. (Stepney)


Bottomley, Rt. Hon. A. G.
Collins,V.J.(Shoreditch &amp; Finsbury)
Evans, Albert (Islington, S.W.)


Bowden, H. W. (Leicester, S.W.)
Craddock, George (Bradford, S.)
Fernyhough, E.


Bowles, F. G.
Cronin, J. D.
Finch, H. J.


Boyd, T. C.
Crossman, R. H. S.
Forman, J. C.


Braddock, Mrs. Elizabeth
Cullen, Mrs. A.
Fraser, Thomas (Hamilton)




Gaitskell, Rt. Hon. H. T. N.
McKay, John (Wallsend)
Shinwell, Rt. Hon. E.


George, Lady Megan Lloyd(Car'then)
Macpherson, Malcolm (Stirling)
Short, E. W.


Gibson, C. W.
Mahon, Simon
Shurmer, P. L. E.


Greenwood, Anthony
Mallalieu, E. L. (Brigg)
Silverman, Julius (Aston)


Grey, C. F.
Mann, Mrs. Jean
Silverman, Sydney (Nelson)


Griffiths, David (Rother Valley)
Marquand, Rt. Hon. H. A.
Simmons, C. J. (Brierley Hill)


Griffiths, Rt. Hon. James (Llanelly)
Mason, Roy
Skeffington, A. M.


Griffiths, William (Exchange)
Mayhew, C. P.
Slater, Mrs. H. (Stoke, N.)


Hale, Leslie
Mellish, R. J.
Slater, J. (Sedgefield)


Hall, Rt. Hn. Glenvil (Colne Valley)
Messer, Sir F.
Smith, Ellis (Stoke, S.)


Hamilton, W. W.
Mikardo, Ian
Sparks, J. A.


Hannan, W.
Mitchison, G. R.
Steele, T.


Harrison, J. (Nottingham, N.)
Monslow, W.
Stewart, Michael (Fulham)


Hastings, S.
Moody, A. S.
Stonehouse, John


Hayman, F. H.
Morris, Percy (Swansea, W.)
Strachey, Rt. Hon. J.


Healey, Denis
Morrison, Rt. Hn. Herbert(Lewis'm,S.)
Strauss, Rt. Hon. George (Vauxhall)


Henderson, Rt. Hn. A. (Rwly Regis)
Mort, D. L.
Stross, Dr. Barnett (Stoke-On-Trent, C.)


Herbison, Miss M.
Moss, R.
Summerskill, Rt. Hon. E.


Hobson, C. R. (Kelghley)
Moyle, A.
Swingler, S. T.


Holman, P.
Mulley, F. W.
Sylvester, G. O.


Holmes, Horace
Noel-Baker, Rt. Hon. P. (Derby, S.)
Taylor, Bernard (Mansfield)


Houghton, Douglas
Oliver, G. H.
Thomas, Iorwerth (Rhondda, W.)


Howell, Charles (Perry Barr)
Orbach, M.
Thomson, George (Dundee, E.)


Hoy, J. H.
Oswald, T.
Thornton, E.


Hubbard, T. F.
Owen, W. J.
Timmons, J.


Hughes, Emrys (S. Ayrshire)
Padley, W. E.
Tomney, F.


Hughes, Hector (Aberdeen, N.)
Paget, R. T.
Usborne, H. C.


Hunter, A. E.
Paling, Rt. Hon. W. (Dearne Valley)
Viant, S. P.


Hynd, H. (Accrington)
Palmer, A. M. F.
Weitzman, D.


Hynd, J. B. (Attercliffe)
Pannell, Charles (Leeds, W.)
Wells, Percy (Faversham)


Isaacs, Rt. Hon. G. A.
Pargiter, G. A.
Wells, William (Walsall, N.)


Jay, Rt. Hon. D. P. T.
Parker, J.
West, D. G.


Jeger, Mrs. Lena (Holbn &amp; St. Pncs, S.)
Parkin, B. T.
Wheeldon, W. E.


Jenkins, Roy (Stechford)
Paton, John
White, Mrs. Eirene (E. Flint)


Johnson, James (Rugby)
Pearson, A.
White, Henry (Derbyshire, N.E.)


Johnston, Douglas (Paisley)
Peart, T. F.
Wigg, George


Jones, David (The Hartlepools)
Pentland, N.
Wilkins, W. A.


Jones, Elwyn (W. Ham, S.)
Plummer, Sir Leslie
Willey, Frederick


Jones, jack (Rotherham)
Popplewell, E.
Williams, Rev. Llywelyn (Ab'tillery)


Jones, J. Idwal (Wrexham)
Prentice, R. E.
Williams, Ronald (Wigan)


Jones, T. W. (Merioneth)
Price, J. T. (Westhoughton)
Williams, W. R. (Openshaw)


Kenyon, C.
Probert, A. R.
Willis, Eustace (Edinburgh, E.)


Key, Rt. Hon. C. W.
Proctor, W. T.
Wilson, Rt. Hon. Harold (Huyton)


King, Dr. H. M.
Randall, H. E.
Woodburn, Rt. Hon. A.


Lawson, G. M.
Rankin, John
Woof, R. E.


Lee, Frederick (Newton)
Redhead, E. C.
Yates, V. (Ladywood)


Lewis, Arthur
Reid, William
Younger, Rt. Hon. K.


Lipton, Marcus
Rhodes, H.



Logan, D. G.
Roberts, Albert (Normanton)
TELLERS FOR THE AYES:


Mabon, Dr. J. Dickson
Roberts, Goronwy (Caernarvon)
Mr. J. Taylor and


MacColl, J. E.
Robinson, Kenneth (St. Pancras, N.)
Mr. G. H. R. Rogers.


McInnes, J.
Ross, William





NOES


Agnew, Sir Peter
Boyd-Carpenter, Rt. Hon. J. A.
Dance, J. C. G.


Aitken, W. T.
Braine, B. R.
Davidson, Viscountess


Allan, R. A. (Paddington, S.)
Braithwaite, Sir Albert (Harrow, W.)
D'Avigdor-Goldsmid, Sir Henry


Alport, C. J. M.
Brooke, Rt. Hon. Henry
Deedes, W. F.


Arbuthnot, John
Brooman-White, R. C.
Digby, Simon Wingfield


Armstrong, C. W.
Browne, J. Nixon (Craigton)
Dodds-Parker, A. D.


Ashton, H.
Bryan, P.
Donaldson, Cmdr. C. E. McA.


Astor, Hon. J. J.
Bullus, Wing Commander E. E.
Doughty, C. J. A.


Atkins, H. E.
Butcher, Sir Herbert
Drayson, G. B.


Baldook, Lt.-Cmdr. J. M.
Butler, Rt. Hn. R. A. (Saffron Walden)
du Cann, E. D. L.


Baldwin, A. E.
Campbell, Sir David
Dugdale, Rt. Hn. Sir T. (Richmond)


Balniel, Lord
Carr, Robert
Duncan, Capt. J. A. L.


Barber, Anthony
Gary, Sir Robert
Duthie, W. S.


Barlow, Sir John
Channon, Sir Henry
Eden, J. B. (Bournemouth, West)


Barter, John
Chichester-Clark, R.
Elliot, Rt. Hon. W. E. (Kelvingrove)


Baxter, Sir Beverley
Churchill, Rt. Hon. Sir Winston
Elliott, R. W. (N'castle upon Tyne, N)


Beamish, Maj. Tufton
Cole, Norman
Emmet, Hon. Mrs. Evelyn


Bell, Ronald (Bucks, S.)
Conant, Maj. Sir Roger
Errington, Sir Eric


Bennett, F. M. (Torquay)
Cooke, Robert
Erroll, F. J.


Bennett, Dr. Reginald
Cooper, A. E.
Fell, A.


Bevins, J. R. (Toxteth)
Cooper-Key, E. M.
Finlay, Graeme


Bidgood, J. C.
Cordeaux, Lt.-Col. J. K.
Fisher, Nigel


Birch, Rt. Hon, Nigel
Corfield, Capt, F. V.
Fletcher-Cooke, C.


Bishop, F. P.
Craddock, Beresford (Spelthorne)
Fort, R.


Black, C. W.
Crosthwaite-Eyre, Col. O. E.
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)


Boothby, Sir Robert
Crowder, Sir John (Finchley)
Freeth, Denzil


Bossom, Sir Alfred
Cunningham, Knox
Galbraith, Hon. T. G. D.


Bowen, E. R. (Cardigan)
Currie, G. B. H.
Gammans, Lady







Garner-Evans, E. H.
Kirk, P. M.
Raikes, Sir Victor


George, J. C. (Pollok)
Lagden, G. W.
Ramsden, J. E.


Gibson-Watt, D.
Lambert, Hon. G.
Rawlinson, Peter


Glover, D.
Lambton, Viscount
Redmayne, M.


Glyn, Col. R.
Lancaster, Col. C. G.
Remnant, Hon. P.


Godber, J. B.
Leather, E. H. C.
Renton, D. L. M.


Gomme-Duncan, Col. Sir Alan
Leavey, J. A.
Ridsdale, J. E.


Goodhart, Philip
Leburn, W. G.
Robertson, Sir David


Gower, H. R.
Logge-Bourke, Maj. E. A. H.
Robinson, Sir Roland (Blackpool, S.)


Graham, sir Fergus
Lindsay, Hon. James (Devon, N.)
Rodgers, John (Sevenoaks)


Grant, W. (Woodside)
Lindsay, Martin (Solihull)
Roper, Sir Harold


Grant-Ferris, Wg Cdr. R. (Nantwich)
Linstead, Sir H. N.
Ropner, Col. Sir Leonard


Green, A.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Russell, R. S.


Gresham Cooke, R.
Longden, Gilbert
Sandys, Rt. Hon. D.


Grimond, J.
Low, Rt. Hon. A. R. W.
Schofield, Lt.-Col. W.


Grimston, Hon. John (St. Albans)
Lucas, Sir Jocelyn (Portsmouth, S.)
Scott-Miller, Cmdr. R.


Grimston, Sir Robert (Westbury)
Lucas-Tooth, Sir Hugh
Sharples, R. C.


Hall, John (Wycombe)
McAdden, S. J.
Shepherd, William


Harris, Reader (Heston)
Macdonald, Sir Peter
Simon, J. E. S. (Middlesbrough, W.)


Harrison, A. B. C. (Maldon)
Mackeson, Brig. Sir Harry
Smithers, Peter (Winchester)


Harrison, Col. J. H. (Eye)
Mackie, J. H. (Galloway)
Smyth, Brig. Sir John (Norwood)


Harvey, Sir Arthur Vere (Maeclesfd)
McLaughlin, Mrs. P.
Spearman, Sir Alexander


Harvey, Ian (Harrow, E.)
Maclay, Rt. Hon. John
Speir, R. M.


Harvey, John (Walthamstow, E.)
Maclean, Sir Fitzroy (Lancaster)
Spence, H. R. (Aberdeen, W.)


Hay, John
McLean, Neil (Inverness)
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Heald, Rt. Hon. Sir Llonel
Macmillan, Rt. Hn. Harold (Bromley)
Stanley, Capt. Hon. Richard


Heath, Rt. Hon. E. R. G.
Macpherson, Niall (Dumfries)
Stevens, Geoffrey


Henderson, John (Cathcart)
Maddan, Martin
Steward, Harold (Stockport, S.)


Henderson-Stewart, Sir James
Maitland, Cdr. J. F. W.(Horncastle)
Steward, Sir William (Woolwich, W.)


Hesketh, R. F.
Maitland, Hon. Patrick (Lanark)
Stoddart-Scott, Col. Sir Malcolm


Hicks-Beach, Maj. W. W.
Markham, Major Sir Frank
Storey, S.


Hill, Rt. Hon. Charles (Luton)
Marlowe, A. A. H.
Taylor, Sir Charles (Eastbourne)


Hill, Mrs. E. (Wythenshawe)
Marples, Rt. Hon. A. E.
Taylor, William (Bradford, N.)


Hill, John (S. Norfolk)
Marshall, Douglas
Teeling, W.


Hinchingbrooke, Viscount
Mathew, R.
Temple, John M.


Hirst, Geoffrey
Maude, Angus
Thomas, Leslie (Canterbury)


Hope, Lord John
Maudling, Rt. Hon. R.
Thomas, P. J. M. (Conway)


Hornby, R. P.
Maydon, Lt.-Comdr, S. L. C.
Thompson, Kenneth (Walton)


Hornsby-Smith, Miss M. P.
Milligan, Rt. Hon. W. R.
Thompson, Lt.-Cdr. R. (Croydon, S.)


Horobin, Sir Ian
Molson, Rt. Hon. Hugh
Thorneycroft, Rt. Hon. P.


Horsbrugh, Rt. Hon. Dame Florence
Moore, Sir Thomas
Thornton-Kemsley, C. N.


Howard, John (Test)
Mott-Radclyffe, Sir Charles
Tilney, John (Wavertree)


Hudson, W. R. A. (Hull, N.)
Nabarro, G. D. N.
Turton, Rt. Hon. R. H.


Hughes Hallett, Vice-Admiral J.
Nairn, D. L. S.
Tweedsmuir, Lady


Hughes-Young, M. H. C.
Nicholls, Harmar
Vaughan-Morgan, J. K.


Hulbert, Sir Norman
Nicholson, Godfrey (Farnham)
Vickers, Miss Joan


Hurd, A. R.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Wade, D. W.


Hutchison, A. M. C. (Ed'burgh, S.)
O'Neill, Hn. Phelim (Co. Antrim, N.)
Wakefield, Edward (Derbyshire, W.)


Hutchison, Sir Ian Clark (E'b'gh, W.)
Ormsby-Gore, Rt. Hon. W. D.
Wakefield, Sir Wavell (St. M'lebone


Hutchison, Sir James (Scotstoun)
Orr, Capt. L. P. S.
Walker-Smith, Rt. Hon. Derek


Hyde, Montgomery
Orr-Ewing, Charles Ian (Hendon, N.)
Wall, Major Patrick


Hylton-Foster, Rt. Hon. Sir Harry
Osborne, C.
Ward, Rt. Hon. G. R. (Worcester)


Irvine, Bryant Godman (Rye)
Page, R. G.
Ward, Dame Irene (Tynemouth)


Jenkins, Robert (Dulwich)
Pannell, N. A. (Kirkdale)
Waterhouse, Capt. Rt. Hon. C.


Jennings, J. C. (Burton)
Partridge, E.
Watkinson, Rt. Hon. Harold


Jennings, Sir Roland (Hallam)
Peyton, J. W. W.
Whitelaw, W. S. I.


Johnson, Dr. Donald (Carlisle)
Pickthorn, K. W. M.
Williams, Paul (Sunderland, S.)


Johnson, Eric (Blackley)
Pike, Miss Mervyn
Williams, R. Dudley (Exeter)


Joseph, Sir Keith
Pilkington, Capt. R. A.
Wills, G. (Bridgwater)


Joynson-Hicks, Hon. Sir Lancelot
Pitman, I. J.
Wood, Hon. R.


Keegan, D.
Pitt, Miss E. M.
Woollam, John Victor


Kerby, capt. H. B.
Powell, J. Enoch
Yates, William (The Wrekin)


Kerr, Sir Hamilton
Price, David (Eastleigh)



Kershaw, J. A.
Price, Henry (Lewisham, W.)
TELLERS FOR THE NOES:


Kimball, M.
Prior-Palmer, Brig. O. L.
Mr. Oakshott and Mr. Legh.

Mr. Mitchison: I beg to move, in page 28, line 20, after "companies", to insert:
and to be a subsidiary of each of two, three or four other companies, if and so long as more than one-eighth of its ordinary capital is owned by each of those other companies and more than two-thirds thereof by those other companies together, in each case whether directly or through another company or partly directly and partly through another company or other companies".
A subsidiary company is defined in the Bill at present as a company in which

more than half the capital is held by the principal company. A great deal depends on this status; that is to say, the question whether a company is a subsidiary company or not is one of very considerable importance. We have been invited by the Financial Secretary, during the course of our discussions in Committee, to follow him through quite a family of overseas trade corporations. There were the children—the subsidiaries—the grandchildren, and there were uncles and


aunts and heaven knows what in this family, and at one point I think the hon. Gentleman came to this conclusion.
I am now referring to the OFFICIAL REPORT for 27th June, at column 520, to a passage in which the Financial Secretary was explaining the effect of a proviso. I cannot do better than quote his own singularly lucid language. It consisted of two sentences, both models of their kind. Let me take them in order:
So far we have been considering a nonresident shareholding company in an overseas trade corporation, but if that non-resident shareholding company were itself the subsidiary—let us say the mere puppet of a United Kingdom company—the practical effect would be that a United Kingdom company or a United Kingdom resident could be drawing the tax-exempt profits of an overseas trade corporation by drawing them through a nonresident shareholder. It is to prevent this method of avoidance that the case where the non-resident company is a subsidiary of the United Kingdom principal is ruled out.
I then made some observations to the Financial Secretary and I suggested that two or three companies might combine to have a dummy company, and so, without having anything that was a subsidiary of any one of them under the Bill as it is at present drawn, they might, nevertheless, have something that was, in fact and in intention, a subsidiary of two or three of them. As I put it:
… to combine, the three of them, and to put up a dummy between them, and they will get the benefit.
I then said:
I should like to know what is the answer to that. I expect that there is one.
The Financial Secretary replied:
I will certainly pursue that point"— [OFFICIAL REPORT, 27th June, 1957; Vol. 572, c. 520–1.]
It was an engaging picture—the Financial Secretary pursuing the point—and he has been pursuing it ever since, because nothing whatever on this matter has appeared among the Government Amendments on the Notice Paper. I suppose that in the small hours of the morning, one finds the Financial Secretary running round St. James's Park pursuing this particularly elusive point. We are trying to help. At some stage or another he might catch it, and, accordingly, we have tabled this Amendment, the object of which is really quite a simple one, though I agree that it makes the sentence slightly more complicated.
4.45 p.m.
It is simply this. If two, three, or four companies have another company in which between them they own more than two-thirds of the capital, and, to eliminate the case of some small shareholder, each of them holds at least one-eighth of the capital, for the purposes of the Bill that company is to be treated as the subsidiary of each of them. I say at once, and I know that the Financial Secretary will agree with me here, that this is about as complicated a bit of legislation as any Government have ever produced, but—and here I know that the hon. Gentleman will not agree with me—it is about as full of holes as the average sieve.
I have been referring to that sieve several times, but this seems to be a rather large hole—this method of combining to form a subsidiary of two or three companies—and it presents intriguing possibilities when it is a sort of family conspiracy. To take the Financial Secretary's little family, perhaps uncles and nephews will combine to form a subsidiary between them. The relationship at this point really baffles the prohibited marriages notice that appears on church walls occasionally, but perhaps we need not go any further into that metaphor for fear of shocking unnecessarily those concerned with the collection and payment of taxes.
It is abundantly clear, and here I speak most seriously, that one of the easiest ways to get the benefit of this, and to go beyond what is the intention of the Committee and beyond the intention of the Government, is to have subsidiaries—a couple of companies combining to form a single company which will, in effect, act as a subsidiary of both of them. To meet that difficulty, to help the Financial Secretary to end his tiring chases at night and to catch at last the elusive point which he has been following for so long, we submit this Amendment.

Mr. Powell: This is the point which, on 27th June, as the hon. and learned Member for Kettering (Mr. Mitchison) has so literally reminded the Committee, I undertook to pursue. I agree with the hon. and learned Member that there is here, certainly in theory, the possibility of avoidance. Two or more United Kingdom companies might set up a milch cow, non-resident, company in order to draw the tax free trading profits of an overseas trade corporation.
I also agree with the hon. and learned Member that the only way in which that possibility could be dealt with would be by a quite elaborate extension for this purpose of the normal meaning of "subsidiary company." My advice to the Committee, having considered this, is that, although this theoretical possibility of avoidance exists, the danger—at any rate as so far advised—is not so serious as to involve the really extensive recasting which would be necessary if we were to include in the Bill such a redefinition of a subsidiary company. The Amendment might, indeed, serve the purpose in regard to Clause 25 which the hon. and learned Member had particularly in mind, but it would involve a drastic recasting of most of the other parts of the Bill where a subsidiary company appears in a quite different role and function.
I can assure the Committee that this is a possibility which the Inland Revenue will watch very carefully. It will be able to trace the payments made by overseas trade corporations to non-resident companies and will, in turn, be able to trace the receipts of resident United Kingdom companies from non-resident companies. Therefore, it will have the material in its hands for discovering whether this theoretical avoidance device becomes a practical one.
I can assure the Committee that should that be the case the Government would accept the necessity of dealing with it in subsequent legislation, but the danger does not at this stage appear to be so serious as to justify what, in effect, would be a recasting of the provisions of Part IV of the Bill wherever they affect relations between a subsidiary and a principal company.

Mr. H. Wilson: We all recognise the difficulties in which the Financial Secretary is placed. I must confess that my heart goes out to him in sympathy, having heard that he started pursuing the point, but, when half way round St. James's Park, it became a dummy and now, he tells us, it has become a milch cow.

Mr. Powell: There always was a mulch cow in St. James's Park.

Mr. Wilson: I did not know that Financial Secretaries were in the habit of chasing round St. James's Park in the

middle of the night. To encourage the hon. Gentleman to run a little faster and to be more energetic in pursuit of this milch cow, I thought that we should give him some encouragement by dividing in favour of the Amendment, but he has made it clear that this point is very much in the minds of the Revenue which, therefore, will watch it.
The hon. Gentleman has produced a fair argument that this Amendment would entail a lot of consequential changes in other parts of the Bill. Therefore, I think that with a warning we might be prepared to let this go, but in doing so I would draw to his attention the warning given on a not very dissimilar question to a predecessor, the present Minister of Housing and Local Government.
The Committee may recall the autumn Budget of 1955 when, in the Finance Bill, there was an important Clause to deal with the question of dividend stripping. It was a very thoroughly drafted Clause and in the course of the debate on it I expressed a doubt whether an ingeniously minded gentleman might find a way round it. I asked that the Government should devise legislation to deal with that point more speedily. The right hon. Gentleman replied that certainly they would do so. If they found new measures were introduced for the purpose of avoiding that legislation, they would introduce retrospective legislation.
I understand that since then three new methods have been worked out for getting round the provisions in respect of dividend stripping, but none has been introduced because of the fear that the Government would introduce retrospective legislation. I hope that the warning that the Financial Secretary has just given, that the Inland Revenue will be watching whether people will "fiddle" their way round it, will be taken as a similar discouragement to setting up special tax arrangements, the kind of dummy companies to which my hon. and learned Friend referred, and that they will be stopped from doing so.
I will not press the hon. Gentleman now to give an assurance that any action introduced to deal with this matter will be retrospective, but I hope that he will bear that previous case in mind. I hope that the realisation that the Inland Revenue will deal with evasions of this kind might be as effective in the long


run as if the Government had accepted the Amendment.

Mr. Mitchison: In view of what has been said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Bill reported, with an Amendment; as amended (in Committee and on recommittal), considered.

New Clause.—(AMENDMENT AS TO REGULATIONS UNDER FINANCE ACT, 1933, SCH. 5.)

Any statutory instrument made in exercise of the power to make regulations conferred on the Board of Trade by the Fifth Schedule to the Finance Act, 1933 (which contains provisions for determining the country of origin of imported goods for purposes of preference under the Import Duties Act, 1932, and the Ottawa Agreements Act, 1932), shall be subject to annulment in pursuance of a resolution of either House of Parliament.—[Mr. Powell.]

Brought up, and read the First time.

Mr. Powell: I beg to move, That the Clause be read a Second time.
The desirability of this new Clause arises in the following way. Under the simplification of Customs duty procedure which is introduced by Clause 5 and the Second Schedule to the Bill, preference will be allowed in cases of duty leviable upon a component part of goods in respect of the provenance of the goods themselves and not of the component part. That is to say, in future, in order to decide whether preference is allowable in respect of that particular duty it will be necessary only to look at the country of origin of the goods which contain the dutiable article and not to go back to the country of origin of the dutiable article which forms part of the goods.
As a result, it will be necessary to make new preference regulations on this new and simplified basis. The preference applies, however, to two kinds of duty— protective duties levied under the 1933 Finance Act and Rvenue duties levied under the 1919 Finance Act. Unfortunately, while the preference regulations under the 1919 Act are prayable, those under the 1933 Act—probably by a mere oversight—are not prayable.
It is, consequently, not practicable to make one set of new preference regulations without producing the monstrosity

of a set of regulations part of which could be annulled by a Prayer by this House and part of which could not. It is to make it possible to make one set of regulations which will be subject to annulment by this House that the annulment procedure is applied by this new Clause to regulations under the 1933 Act.

5.0 p.m.

Mr. Roy Jenkins: The proposed Clause seems very reasonable to us, and we certainly would not wish to oppose it. We hope that the Government Front Bench will welcome the new Clauses that we move in the way that we are able to welcome this one.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause.—(REBATES OF CUSTOMS DUTY AND EXCISE DUTY ON HYDROCARBON OILS FOR USE IN PUBLIC SERVICE VEHICLES DRIVEN BY DIESEL FUEL.)

On and after the fifth day of August, nineteen hundred and fifty-seven, there shall be allowed from the customs duty a rebate at the rate of two shillings and sixpence a gallon and from the excise duty a rebate at the rate of one shilling and threepence a gallon on the delivery of hydrocarbon oil for use in any mechanically propelled vehicle driven by diesel fuel and licensed as a public service vehicle for the carriage of passengers.—[Mr. Ernest Davies.]

Brought up, and read the First time.

Mr. Ernest Davies: I beg to move, That the Clause be read a Second time.

Mr. Deputy-Speaker (Sir Gordon Touche): It will probably be for the convenience of the House to discuss at the same time the next two Clauses— "Rebates of customs duty and excise duty on hydrocarbon oils for use in mechanically propelled vehicles driven by diesel fuel and for use on roads," and "Rebate of customs duty and excise duty on motor spirit."

Mr. Ernest Davies: I think that will be for the convenience of the House, Mr. Deputy-Speaker. These Clauses have been tabled because of our disappointment at the failure of the Chancellor of the Exchequer to take any action about the reduction of the Petrol Duty except to remove the extra shilling which was


added during the Suez crisis. Thus, the burden of tax remains as it was previously, and it is very substantial, particularly for public transport.
The three Clauses differ. The first Clause proposes simply that all public service vehicles—that is, those vehicles used for road passenger transport—should be exempt from tax in respect of diesel oil. The second Clause does the same in respect of all diesel oil used in road transport. Therefore, it applies equally to public service vehicles and road goods vehicles. The third Clause is very different. It is a straightforward proposal for a reduction of 6d. in the duty in the case of both light and heavy oil.
The reason why we suggest that there should be this discrimination in favour of diesel oil, which is commonly known as derv, is that the effect of the high tax on the cost of living in respect of fares for both road passenger vehicles and the carriage of goods by road transport generally is a direct charge, and, with the rise in other costs, the tax thus has a greater effect.
When we have previously moved Clauses similar to these we have been met with the argument that it is impracticable to have discrimination as between the users of different forms of fuel—that is, between the users of petrol and the users of diesel oil—but I would point out to the Economic Secretary that this system is pursued in every other country in Western Europe as well as some countries elsewhere. I have here a list of the differentials as between gasolene and gas oil in Western European countries. Clearly, the costs of transport in those countries are, as a consequence, less than in this country, and that puts this country at a disadvantage in the competitive market in Europe.
In Belgium and the Netherlands, for instance, where the price of petrol is roughly the same as here—being 4s. 4d. and 4s. respectively, for the regular grade —the tax on petrol is 2s. 7d. in the case of Belgium and 2s. 4d. in the case of the Netherlands. However, in the case of gas oil the tax is only 1s. 2d. instead of 2s. 7d. in Belgium, and it is practically negligible in the Netherlands, being only about ld. per gallon. The consequence is that the price of derv in Belgium is only Is. 9d.

compared with 4s. 3d. in this country at the present time, and in the Netherlands it is only 1s. 7d. compared with 4s. per gallon for petrol there.
In some other countries diesel oil is completely free of tax although the petrol tax may be as high as it is here. That is certainly the case in the Scandinavian countries of Sweden and Denmark where the price of petrol and the tax are roughly the same as here, but the price of derv is very much cheaper, being only Is. 10d. because it is completely free of tax. In every one of these countries of Western Europe that situation prevails, whereas in this country the tax is the same on both derv and petrol and, consequently, the price of the two oils is the same.
With regard to the advantage of the price of diesel oil being reduced, there is no question that if it encourages the consumption of diesel oil in preference to petrol a considerable economy is made. In actual fact, the lighter vehicles which are diesel-operated consume roughly only half the amount of fuel that petrol vehicles do. In other words, the mileage of a light diesel vehicle is twice that of a petrol-driven vehicle for the same quantity of fuel. The heavier diesel vehicles, which are mainly buses and coaches and heavy goods vehicles, consume anything from 25–50 per cent. less oil than do petrol-driven vehicles. Therefore, although the initial capital costs may be higher, there is a considerable saving in operating costs, which reduces transport costs generally, and there is obviously a saving in imports because if less oil is consumed, less oil needs to be imported. Another important factor is that, with the steady expansion of the Western European market and the coming of the Common Market and the Free Trade Area, and, thus, with increased competition, this country will be at a disadvantage if its transport costs are at a higher level than those of its competitors on the Continent.
One argument which has been used against these proposals by every spokesman from the Treasury Bench—although the team changes, each time we make these proposals the same brief is produced, and it is getting a little dusty—is that what is proposed is not administratively possible. If every other country in Western Europe finds it administratively


possible to have a differential tax as between derv and petrol, I cannot see why we cannot have it. Our Civil Service is reputed to be one of the finest in the world, and it is held to be fairly ingenious —as we have found it to be to our disadvantage on occasion. Surely it has the ability to devise a foolproof method of imposing a differential tax as between the two forms of oil used in road transport.
As a matter of fact, an opportunity exists already for evasion if it were not possible to introduce a system which prevented it. As no evasion has been suggested, it seems that there is some system in vogue at the present time which prevents the creation of a black market in respect of oil which is not taxed. The oil which is not taxed does not appear to be consumed in a way it should not be consumed; otherwise something would be known about it.
At present, the same oil is used by the railways for different purposes, some being taxed and some not. The railways use in their buses and goods vehicles diesel oil on which tax is imposed. In their diesel units and for other purposes they use precisely the same oil which is not taxed. Diesel oil is used for a great number of purposes—agriculture, heating, stationary oil motors and so on —for which it is not subject to tax. That being the case, there is discrimination at the present time, and I cannot see why it should not be possible to have differential taxes as between the two forms of oil.
We consider the first of these proposed new Clauses the most important, because it relates to public service vehicles and public transport faces considerable difficulties at this time. Costs are mounting and fares rising. There comes a point, as is well known, when the law of diminishing returns operates, when fares can no longer be increased because the higher they go the more encouragement is provided for people to desert public transport and use other forms of transport. We are all aware of the vast increase in the number of motor scooters and light motor cycles as well as the increase in the number of people who use private cars. This is a disadvantage because it causes a greater congestion on the roads. Public transport is slowed down, which makes it less efficient and causes the service to deteriorate. Costs

are increased, and, incidentally, the danger on the roads becomes greater.
If members of the public are driven to desert public transport, it means that those who must use it will have to pay correspondingly higher fares because there will be fewer passengers over which the cost can be spread. If this process continues, it will mean that many unremunerative services will have to be cut out. It is well known that bus undertakings subsidise one another, there is cross-subsidisation in the industry because that is the only way a large number of rural services can be provided. In a recent Report of the British Transport Commission, it is stated that 200 million car miles of unremunerative services are run each year. If costs continue to rise and it is impossible to increase fares without disastrous results, more and more of these unremunerative services, which are mainly rural services, will have to be cut out. This would prove most unfortunate because a large number of people are obliged to use public transport every day in order to get to their work. It is impossible for these people to use other forms of transport.
The acceptance of this Clause would result in considerable assistance being afforded to public service transport, because the vast majority of buses and coaches are diesel operated. A Question which I put to the Minister of Transport and Civil Aviation on 10th July elicited the information that of 75,000 public service vehicles no less than 62,000, which represents 82 per cent., were dieselengined, and 13,000 vehicles, or 18 per cent., were petrol driven.
The argument previously used has been that if there were a favourable differential for diesel oil it would encourage a conversion from petrol to diesel oil and the duty payable on petrol would no longer accrue to the Treasury. That is a false argument, because although there would remain nearly 18 per cent. of vehicles which are petrol driven, proportionately, they do far less mileage than the dieselengined vehicles. The 82 per cent, of diesel vehicles do about 90 per cent. of the mileage. In view of that, it is no longer convenient to advance the argument either that there would be a conversion from petrol to diesel oil and the Treasury would lose a considerable sum in duty, or that it would affect rail transport. The mileage in the rural areas


which is covered by petrol driven vehicles is by no means considerable, and all the time the number of diesel driven vehicles is increasing proportionately, as is shown by the number of registrations published periodically.
The costs of public transport are rising all round. There is another proposed new Clause on the Notice Paper, which is not to be selected, in which it is proposed to reduce the duty on public service vehicles. I will not discuss that, except to say that the incidence of the vehicle Excise licence on public transport is most unfair. It adds to the cost and, if it is to be retained at the present level, that is another argument, why the duty on diesel oil should be reduced. Actually, £5½ million is paid in Excise licences to the Treasury, which represents as much as a 5½d. tax on fuel, which is a considerable amount. Were the tax reduced, the incidence would not be so great.
5.15 p.m.
I do not understand why the Government are so prejudiced against public transport. During the last month it has been announced that other costs are to be increased, and these are within the control of the Government. The public service licence is to go up from £4 to £6, and the cost of a certificate of fitness is to be increased from £5 to £5 10s. Orders to that effect have been laid. All these increasing costs make greater the difficulties of the operators. The cost of accepting the new Clauses would not be very great. Only one-sixth of the diesel oil consumed today is used in road passenger transport and, therefore, subject to duty. In reply to a Question, the Chancellor of the Exchequer stated earlier this month that the cost of removing the duty on diesel oil used in public service vehicles would be £30 million. That is a large sum, but the removing of that amount of duty would bring considerable aid to the industry.
The cost of removing the duty on all diesel oil, as is proposed in the second new Clause, would be £68 million. The reduction of the total duty by taking off 6d. all round would, on last year's tax figures, cost about £70 million. So the cheapest of the proposals contained in these new Clauses is that in the first, which is the one we favour most and which we consider practical. I hope that

the Economic Secretary will not just use the old brief to which I have referred and brush this matter aside without giving any hope of some relief.
The outlook for the road passenger transport industry is pretty grim at the present time. Costs are rising and there is a new wage demand which is the subject of negotiation at the moment. Fares are almost certain to rise unless some relief is provided for the industry. If fares are increased, we shall get back again into that vicious circle of traffic being lost and losses on the services increasing. Unremunerative services will be cut out and there will be an all-round deterioration in public transport. That is the outlook which faces us. It is within the power of the Chancellor to change it and bring some relief to the industry.

Mr. David Jones: I beg to second the Motion.
I hope the right hon. Gentleman will not tell us tonight what a predecessor of his told us last year and the year before, that one of the reasons why the Treasury would not look at this reduction was that petrol-driven vehicles were primarily used in the rural areas and diesel-run vehicles were used mainly in the urban areas. I hope that the knowledge of even the Minister of Pensions and National Insurance of the public transport industry has improved since then.
The figures quoted by my hon. Friend the Minister for Enfield, East (Mr. Ernest Davies) shows quite clearly that far and away the greatest number of public service vehicles are now driven on diesel oil, and he pointed out that the taxation on diesel oil used for public service vehicles is higher than that imposed by any other country in Western Europe. It is at present about 2s. 6d. per gallon.
The diesel-engined vehicle used in public service transport is mainly of the double-decker type, but whether double or single-deck, in the traffic conditions encountered in most parts, those vehicles do little more than 12 miles to the gallon, if as much. I have been at some pains today to check with some of the people engaged in the industry. I find that in some of the hillier parts, particularly in South Wales, vehicles do not run at much more than seven miles to the gallon but that the industry as a whole regards ten


miles as the average distance that can be got out of a gallon of diesel oil, whether used in a double-decker or single-decker vehicle. It is the condition of the roads rather than the size of the vehicle that primarily controls the consumption.
It obviously follows, therefore, that the first three coppers of every mile of route covered by a public service transport vehicle go automatically to the Treasury. In the past years, there has been a good deal of debate in this House about the withdrawal of rural transport services. I know of one depot in a rural area where, of more than forty routes operating, more than thirty are in rural areas and either break even or lose money. They lose money, in the main—the vehicles being diesel-engined— because of that first 3d. per mile that goes to the Treasury.
At the present moment there is a wage claim pending in the passenger transport industry. If that claim is conceded it must of necessity mean an increase in fares. It must also of necessity mean that a growing number of public service vehicle routes will become unremunerative and will need to be withdrawn. Another disturbing feature is the effect of the public service transport fares which have to be charged to men going to and from their work. I think particularly of my own constituency on Teesside, where large numbers of people travel many miles by bus each day to their work, either at I.C.I. at Billingham, the Dorman Long works at Wilton, or at the I.C.I. extension.
It costs them a good deal of money to travel return journeys of five or six miles each day of the week, and they find it more economical for four or five of them to combine to invest in a secondhand car and to abandon the public service transport. That does two things. It turns a profitable route into an unprofitable one, but much more important, it congests our narrow roads. The result is that the speed of the public service vehicles is reduced and the route becomes unremunerative.
I believe that all these difficulties can be obviated. If the Chancellor means what he says in public, if he really wants to maintain or reduce working-class family costs, this seems to be the best

way in which he can spread £30 million over a very large section of the working population. It is estimated that we have about 22½ million insured workers, and I would hazard a guess that about 75 per cent. of them travel to work mainly on public transport. A reduction of 3d. per mile in the operating costs as a result of accepting the first new Clause would enable large numbers of bus companies —particularly those operating workmen's services—to maintain their services.
Obviously, if their costs continue at their present level, and if other costs, including wage costs, increase, more and more will the bus companies need to apply for increased fares. One has only to look at the passenger trade journals to see the large number of applications that have been made in past months to retain the increased fares brought about by a piece of legislation introduced by the present Prime Minister, when Chancellor of the Exchequer, to get over the difficulty consequent upon Suez. I suppose it is technically true that as a result of the withdrawal of the 1s. additional tax to pay for Suez the additional charges which were imposed on fares have been theoretically withdrawn, but in actual practice what has happened is that the vast majority of bus companies, both municipally and privately owned, have applied to the licensing authorities to retain those increased fares to meet increased costs.
Any further increase in costs is bound to result in a diminution of the number of services operated to the detriment of the productivity efficiency of the people engaged in industry. If the Chancellor is anxious to demonstrate that he really means what he says outside this House, he should accept the first new Clause, which will cost him £30 million in a year. But if the Economic Secretary and the Financial Secretary, who are now occupying the Government Front Bench, want to be much more generous than that, there is no difficulty. They can adopt the second new Clause and give away £60 million—and there is no reason why they should not give away £60 million mainly to working folk, having regard to what they have already given to the higher income groups; or, if they want to be still more generous, they have got a third chance.
5.30 p.m.
Both occupants of the Treasury Bench at the moment have either a direct or indirect connection with the Principality, and there is, as both of them know, a saying in the Principality—"Three tries for a Welshman." I suggest that if they want to be really generous at this stage they can adopt the third alternative offered to them. Certainly if they want to make a gesture to the working people, in view of the very necessary costs involved to enable them to get to and from their work, the first proposed new Clause ought to be accepted.
If this Clause cannot be accepted, I hope that we shall get some real reasons why instead of falling back on the old tag that I mentioned at the beginning of my speech. Here is an opportunity for the Chancellor to do something to maintain stability and to anticipate increased costs in public service transport which are bound to follow in the next few weeks.

Mr. Donald Chapman: My hon. Friend the Member for The Hartlepools (Mr. D. Jones) has referred to local authorities and bus companies being forced to apply for the retention of the extra fares charged during the Suez crisis, and my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) said that companies and undertakings would soon be bound to apply for yet further increases.
I should like to give one example of an undertaking that has had to do both those things; indeed, the whole scheme has just reached a final conclusion. The figures involved are very instructive. In Birmingham, £21,000 a week is now being lost on public transport. That is an enormous figure. If there were no increase in fares at the moment, we should end 1957 with something like £1 million deficit on the transport undertaking.
The result of this has been that the Corporation has had to apply for permission to charge higher fares, and the commissioners have been bound to grant that request, so that there is to be something like a 1½d. increase on all the higher fares. Fares of 5½d., 6½d., 7½d. and so on will be increased by l½d. In a city the size of Birmingham, that matters a great deal. We have an increasing number of people moving out from the old,

derelict built-up areas of the city to live in the suburbs, and they are finding that their expenditure on daily travel to and from work is increasing by something like 25 per cent. The result of this will be another twist in the inflationary spiral. It will not end merely with increased fares. The next thing will be a demand by the engineering industry for increased wages to counteract the effect of the increased bus fares throughout the Black Country.
I am glad that the Chancellor has returned to the Chamber. He is looking a little more haggard than he did before the Second Reading and the early part of the Committee stage of the Bill. Perhaps that is because on the other side of the House he has become the centre of another internecine quarrel. The original Budget which was greeted with waiving Order Papers is now realised to be something which will give yet another twist to the inflationary spiral. The right hon. Gentleman ought to realise that, particularly when we deal with a proposed new Clause like this.
In 1954–55–56 after some earlier increases, in Birmingham we tried by every means possible to follow the lead of the Government to hold prices. As a result, the Birmingham undertaking was able to pay off some of its early deficiencies. But now in 1957, coinciding with the row on the other side of the House about the inflationary situation, we have had further increases. The matter does not end there. When the undertaking's fares go up, wages have to go up to enable people to pay the fares, and the whole thing starts off again.
In a circumstance like this, what a wonderful opportunity to use some of this revenue which the right hon. Gentleman has been happily distributing elsewhere to much less good effect. The tax concession of 2s. 6d. off derv, which is proposed in one of the new Clauses, would more than meet the cost of preventing Birmingham undertakings from going into the red this year. Indeed, if only the Government would meet us half way there would be no reason at all for another twist to be given to the inflationary spiral in Birmingham by increasing passenger fares by something like 25 per cent.
There is another way in which this whole procedure is farcical. The commissioners have granted the request for these


increases in Birmingham in the hope that this will enable the undertaking to pay off its deficit and set aside £100,000 a year for replacement of new buses, starting in 1962. What a hope. There is no hope at all, because in two years time at the very latest under the present Government they will be in the red again, because the inflationary spiral will have gone up a few more stages.
This matter becomes quite farcical, because we are continually planning to get these undertakings out of the red and then they run into the red again because of the Government's general policy of inflation. I should have thought this was a wonderful opportunity to use some of the money which the Chancellor has been distributing in this Budget to much better purpose in arresting some of the really terrible things which cause inflation in this country.
It is instructive to see how all this reacts in Birmingham. We do not have any honest appraisal of the situation by the Conservative Party; we are not told that this is the result of Government policy. The whole thing is sidetracked into a lot of nonsense about the efficiency of the undertaking. What undertaking, whatever its efficiency, is going to face an increased wages bill of £125,000 a year? What undertaking is going to cheesepare here and there, cutting down the frequency of buses and so on—which is one of the nonsensical things suggested as a solution to this problem—ending in further anxiety and industrial dislocation?
Instead of placing the fault where it lies, at the door of the Government and at the door of this kind of taxation which could very well have been relieved in this Budget, the party opposite are running around with silly stories about the nature of the efficiency of the undertaking. This is the best-run undertaking in the country. The buses are comfortable and the services are frequent. We are told to imperil all that, and we cannot get out of the Government the sort of tax concession which would enable the undertaking to operate without loss.
Generally speaking, the suggestion embodied in this proposed new Clause, together with our earlier suggestion relating to 15 per cent., 10 per cent. and 5 per cent. Purchase Tax reductions, is about the best tax concession that the Chancellor could have given in this

Budget. It would have really helped towards curing the terrible inflation in this country.

Mr. Birch: The hon. Member for Enfield, East (Mr. Ernest Davies) hoped that I would not speak from the usual Treasury brief. I have not read previous Treasury briefs, but I dare say that it will bear a family resemblance. I thought that the hon. Member's brief was of good sound vintage, because he dealt with the points normally raised on this subject.
At the end of his speech, the hon. Member for Northfield (Mr. Chapman) went fairly wide in his interesting discussion of the local politics of Birmingham and in his reflections on general economic policy. I understand that we are shortly to have a debate on general economic policy and, therefore, I hope that he will forgive me if I do not pursue that subject now.
We are at the moment discussing three new Clauses, all of which do rather different things, which makes the debate a little confusing to follow. There is, first, the Clause to exempt derv used in public transport, secondly, the Clause to exempt derv altogether, and, thirdly, the Clause to reduce the tax on petrol by 6d. a gallon. When we are discussing these new Clauses, we are getting into very big money indeed. If we add together what the hon. Gentleman wants us to do, it comes to £113 million. I think that he himself worked it out as a little more. But £113 million in excess of all the relief given in the Budget is a very big sum indeed. All I can say is that if we want to reduce inflation I do not think that is the way to do it.

Mr. D. Jones: I think the right hon. Gentleman must be a little wrong, because the first new Clause is embraced in the second, and if he accepts the second I do not suppose that he wants to add the first to it.

Mr. Birch: I have not done so. I did say that the first was included in the second, but adding the effect of the new Clauses together, the cost is slightly lower than that stated by the hon. Gentleman the Member for Enfield, East. It is £113 million. We know that inflation has been described as too much money chasing too


few goods. Here is a device for increasing the amount of money without increasing the amount of goods. I do not think that we can do it.

Mr. Chapman: The right hon. Gentleman is now failing, very conveniently for his own purpose, to distinguish between the two kinds of inflation which we have always tried to distinguish. There is the one inflation of too much money chasing too few goods, but there is also the other one, which he has not mentioned, which is the wages-prices inflation, the two chasing each other in a momentum of their own, and that is the one at issue in this new Clause.

Mr. Birch: I do not think that a large reduction of taxation would do much to help cost inflation. All taxation is odious, and nothing would be nicer than to reduce this tax, to take 2s. 6d. off the Income Tax and to do a lot of other very desirable things which I daresay hon. Gentlemen opposite would argue would help cost inflation. I do not think that they would.
To take the second new Clause first, that dealing with the exemption of derv altogether, I do not want to plead administrative difficulties. I do not think that if we exempted derv altogether there would be much administrative difficulty, but it would be extremely costly, and it would have, as the hon. Gentleman realised, two effects. He realised the first one, at any rate. It would stimulate most actively the turnover of vehicles from petrol to derv, and therefore the cost would steadily and rapidly increase. It would have the second effect, which I am sure the hon. Gentleman does not intend, of being disastrous for the shale industry, because it would remove the preference, but no doubt that could be overcome by other means.

Mr. Ernest Davies: That is quite negligible, and I do not think the right hon. Gentleman will produce it as a serious argument. Will he not accept that there is already a conversion from petrol to diesel engine vehicles? This process has been going on at a progressively increasing rate for a very long period, because it is more economical for diesel engines to be employed, and, therefore, is it not desirable that there should

be encouragement of conversion from petrol to diesel engines?

5.45 p.m.

Mr. Birch: I am not sure that the hon. Gentleman's argument works in the direction he says. If conversion to derv is now taking place at an increasing rate, I do not see any very strong reasons for stimulating it still further.
Coming back to the first new Clause, concerning bus companies, it has been rightly said that it would cost £30 million. So far as the effect on the cost of living in general is concerned, I understand that if we remove the tax altogether it would make a difference of something under a halfpenny on a 3d. fare, which is less than one-third of a point of the cost of living index; so there is not a great deal in that argument.
We were taken to task by the hon. Member for The Hartlepools (Mr. D. Jones), or previous Treasury Ministers were taken to task, on the argument that it would be unfair to some public transport which worked on petrol. He is quite right in saying that the great bulk of public transport is now done on derv. It is equally true that there are many vehicles still on the road, particularly in the rural areas, which use petrol.

Mr. D. Jones: Mr. D. Jonesindicated dissent.

Mr. Birch: I think that my advice may be better than that of the hon. Gentleman. I do not think that would be a very fair way of dealing with the situation. Once we start discriminating like that we get into administrative difficulties.
The exemption of bus companies would, I think, cause quite considerable administrative difficulties. We should also get into difficulty as to where to draw the line. If we exempt someone who wants to go by bus, why should we not exempt his essential food which has to go in a lorry. Once we start on that slope we get into a very tricky position indeed. So I would say that the overwhelming reason for rejecting this new Clause is the cost, which is quite prohibitive, and I think that we should think very carefully now before we make an exemption to a single class of user in that way.

Mr. H. Wilson: The right hon. Gentleman's arguments are again rather strange for the House to have to follow. It is, of course, true that the proposals in these


new Clauses, if taken together, would involve a very heavy loss of Revenue. But let me remind the right hon. Gentleman that it was the Chancellor of the Exchequer in his Budget only three months ago who taught us to think in terms of very big tax concessions.
Surely my hon. Friend the Member for Northfield (Mr. Chapman) was right when he said that if we are to give away £100 million of taxation our proposals would have a very real bearing on the problem of cost inflation and would, in fact, be very strongly disinflationary. They would, in fact, give a twist to the wages-prices spiral in a direction very different from the one which we have come to know so recently. What the Chancellor said in his arguments—I shall not now go into the question of Surtax which we are debating later—was, of course, directly provocative to the Treasury, and influences both cost inflation and demand inflation. So the right hon. Gentleman was right off the rails about that in his reply to my hon. Friend.
The argument in relation to current costs in relation to the problem of the transport undertakings, and in relation, above all, to fares and the pressure on wages was put very clearly by my two hon. Friends who moved and seconded the new Clause. All hon. Members, whatever their constituencies, have a pretty clear idea of the problems arising for their constituents as a result of higher bus fares and charges of that kind.
There is a very special problem—I speak of this with very close knowledge of my own constituency—where there is a large housing estate on the outskirts of a big town. My constituency is to a very large extent made up of Liverpool overspill housing estates. These are outside the city boundaries, which means, incidentally, that my constituents have no control over the local authority which provides the houses or the bus services or fails to provide them. However that may be, by and large, the people who dwell on these housing estates are in many cases the lower paid wage earners and are very often, because of the rules by which the houses are allocated, those with the largest families and the heaviest family costs to bear.
Many of these people—not all of them, because of what was done to provide local

factory employment in the area—have to travel long distances back to the city to work, to the docks and so on. Some of them have suffered from the diminution of overtime working, and some of them have been hit by short-time working. When their bus fares increase as the result of the Government's economic policy—these increases come on top of very much higher rents, for they are the highest-rented people in the area—real hardship is involved.
I will not pursue the point any further, because I want to remind the Economic Secretary—and the Chancellor, too, were he still here—of the commitments and statements made by his own side on this question in past years. We were glad to see the Chancellor pop in for a moment a few minutes ago. My hon. Friend the Member for Northfield was quite wrong to suggest that the right hon. Gentleman was looking haggard; he ought to have been, but he was not. He is far too complacent about the situation. He goes on the air and on television, under these new arrangements whereby Ministers are apparently allowed to broadcast the Government's side of the case and the Opposition is not allowed to broadcast its side, and tells the country that there is nothing to worry about.
Exports, the right hon. Gentleman says, are all right; production is all right. The only trouble is this little business of inflation. Then he tells us that this inflation has nothing to do with the Government, and he washes his hands of the whole business. As I said at the weekend, the Chancellor talks rather like a Minister of Transport who, speaking on the subject of road safety, says that if people would only drive more carefully we should have no more trouble. The Chancellor's attitude is that it is all the result of our wicked population, principally the trade unions, of course, who ask for more earnings.

Mr. Ellis Smith: Did the Chancellor say that?

Mr. Wilson: The right hon. Gentleman did not use those exact words, but if my hon. Friend would study the speech he made last Wednesday, significantly at the opening of one of these vast new office blocks, and the statement which he made to the National Production Advisory Council last Friday—we have not heard


what the National Production Advisory Council thought of the Chancellor, of course—he will find that I did not misrepresent what the Chancellor said. For an account of what he said to the 1922 Committee, we are indebted to the Daily Express.
I am sorry that the Chancellor is not here now because I want to remind him and other right hon. Gentlemen of what members of the Cabinet have said on the very issues we are currently debating. Let us begin with the Foreign Secretary. I know that many of my hon. Friends do not know who the Foreign Secretary is, and I wish I did not; but we used to see a lot of the right hon. and learned Gentleman at the time of the Suez crisis. There was a time, of course, when he used to be very much involved in Finance Bill debates. Frankly, I think that they cost the nation a great deal less than some of his activities during the last few months. In those days, when he used to keep the Committee up during the long hours of the night, he often treated us to his views on matters of taxation. One of his favourite subjects was the tax on petrol and derv, and, during the Second Reading debate on the Finance Bill in 1951 he said:
Now I come to one or two of the specific tax proposals, first of all the tax on petrol. That is a directly inflationary tax.
That was the view of the Foreign Secretary in 1951, when petrol was selling for about 3s. a gallon. Now, the Economic Secretary tells us that this is not an inflationary tax, and to reduce it would have no bearing on the cost inflation.

Mr. Ede: The right hon. Gentleman says that it would stimulate it.

Mr. Wilson: That it would be inflationary to do so. Obviously, there has been no consultation between the Economic Secretary and the Foreign Secretary. I have pointed out that Ministers were obviously not speaking to one another, and that the Board of Trade did not consult the Minister of Food about the commodity markets. The Foreign Secretary went on to say:
It is time that someone in the House drew attention to the enormously increased taxation which road transport has been called upon to bear during the past two years.

Of course, that taxation has been immeasurably increased since then. The right hon. and learned Gentleman made some observations about taxable capacity, the very thing we are talking about:
The very fact that there is not that reserve of taxable capacity is proved by this tax, because the Chancellor has had to go to a tax which is, in my submission, directly inflationary in order to get the necessary amount of money." —[OFFICIAL REPORT, 8th May, 1951; Vol. 487, c. 1890–1.]
I suggest that the Economic Secretary should have some discussion with the Foreign Secretary about this.
Actually, such sentiments as those were not new in the mouth of the Foreign Secretary, for he had said something similar on the subject in 1950 during the Committee stage of the Finance Bill. He referred then specifically, as my hon. Friends have been doing, to the effect upon bus fares and local rates. This was in the days when the Conservatives used to be concerned about local rates. He said:
That is yet another example of the way in which this impost is going to increase the burden of the cost of living upon ordinary people in this country. It is a thoroughly bad tax … I do not think that there could be a better case for not having this increase in taxation."—[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 253.]
That was said when petrol had gone up from 2s. 3d. to 3s. per gallon.
It is not only the Foreign Secretary who has said these things. The Chancellor of the Exchequer himself used to make very passionate speeches, as we all remember. His speeches were usually about analgesia or euthanasia or that kind of subject, but one of his most passionate speeches in a Finance Bill debate was on the subject of the monstrous level of taxation. This was in 1950, when petrol was 3s. a gallon, and on that occasion—I will not attempt to rival the passion which he put into the words—the right hon. Gentleman said:
Every housewife, as she goes shopping and has to pay the extra 1d. in her bus fare, knows the effect of this kind of taxation. I agree with my hon. Friend who said that no tax could have been better designed to force up prices and to increase export costs.
That is exactly the argument of my hon. Friend the Member for Northfield, an argument which the Economic Secretary could not follow and specifically repudiated. Yet his own chief, the present


Chancellor of the Exchequer, referring to the petrol tax, said that
no tax could have been better designed to force up prices and to increase export costs.
The Chancellor of the Exchequer, with £100 million to give away this year, has done nothing at all in the matter of petrol tax, except to remove the impost introduced at the time of Suez in the autumn Budget of the right hon. Gentleman who is now Prime Minister, who, being cleverer than the Lord Privy Seal, did not call it an autumn Budget.
The Chancellor went on to say:
We believe that the whole of this tax is unnecessary"—
the whole of this tax, not just the increase—
is vicious, and is calculated to do all the things which the Chancellor, if he were a wise one, would not at present be attempting to do." —[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 267–269]
Had not the Economic Secretary been told in his brief what the Chancellor of the Exchequer said during those debates during 1950, or is he prepared to concede, with us, that the present Chancellor of the Exchequer is not a wise one? It has been very clear for some months. The Chancellor himself told us that no wise Chancellor would levy the tax at all, and we are proposing only a small reduction.
Of course, I do not want to leave anybody out, though I shall have to, but I might be accused of being a little selective or of being invidious were I to leave out the Lord Privy Seal. In the Budget debate in 1950, the Lord Privy Seal, referring to the tax on petrol, which raised the price to 3s. a gallon said:
It is not a case of fair shares for all, but a case of those with sufficient money who can afford the petrol being able to buy it."— [OFFICIAL REPORT, 19th April, 1950; Vol, 474, c. 153.]
That was the view of the Lord Privy Seal when petrol went up to 3s. a gallon.
6.0 p.m.
There were very many other right hon. Gentlemen opposite who expressed their views, There was the Minister of Supply. There was the present Minister of Pensions and National Insurance. There was, in fact, the Economic Secretary to the Treasury, who was one of the most powerful advocates of a reduction in petrol taxation in 1950 and 1951, but I will not embarrass him by quoting the hyperbole with which he treated the

Finance Bill Committee in those years—[HON. MEMBERS: "Why not?"]—chiefly because I do not have the quotations with me. I did, however, look them up carefully for the purposes of our debate on 10th December last. I commend to the right hon. Gentleman a study of his speeches on that occasion.
I could keep the House going on all night with quotations from what various Parliamentary Secretaries and Whips have said on this subject, but perhaps, before I conclude, I ought to quote the words of the Chancellor of the Duchy of Lancaster, who has the duty of explaining Government policy to those who do not yet understand it. Perhaps these words of his might be helpful to him in his task of explaining the meaning of the Economic Secretary's speech this afternoon.
During the Committee stage of the 1950 Finance Bill, the present Chancellor of the Duchy of Lancaster said:
I will not repeat the argument, or the expression of astonishment, that at a time when this country needs above all lower costs, at a time when this country is above all bothered by a rising cost of living"—
which was then about 30 per cent. lower than it is today—
there should have been selected for this particular piece of money raising an instrument which increases the cost of production and increases the cost of living to a much greater extent than right hon. Gentlemen on the other side of the Committee are prepared to admit.
The right hon. Gentleman then made a bitter attack on the working of the tax, particularly in relation to medical practitioners, especially in rural areas, and this is how he concluded his comments:
… it still remains what it was at the beginning, a tax on the industrial and commercial costs of this country. It is a tax which will result in an increase in the cost of living."—[OFFICIAL REPORT, 14th June. 1950; Vol. 476, c. 277–80.]
That, again, as I have reminded the Committee, was when petrol was 3s. a gallon. Today, it is between 4s. and 5s. a gallon depending on the quality, or the alleged quality, of the petrol. It is at a time when all the problems that were quoted on that occasion are with us, but on an increasing scale, and when the cost of living, which was then referred to not only by the Chancellor of the Exchequer, but by the Chancellor of the Duchy of Lancaster, the Minister of Supply, the Economic Secretary, the Foreign Secretary and the rest of them, has risen and is still rising at an alarming rate.
I am surprised, therefore, that the right hon. Gentleman has not even studied what he and his colleagues said on that occasion. If right hon. Gentlemen studied what they said, I am sure that they would be prepared to admit that it would be less inflationary to withdraw

some of their other concessions in the Budget and to accept the new Clause which has been introduced by my hon. Friend.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 224, Noes 282.

Division No. 165]
AYES
[6.2 p.m.


Ainley, J. W.
Griffiths, David (Rother Valley)
Mulley, F. W.


Albu, A. H.
Griffiths, Rt. Hon. James (Llanelly)
Noel-Baker, Rt. Hon. P. (Derby, S.)


Allaun, Frank (Salford, E.)
Griffiths, William (Exchange)
Oliver, G. H.


Allen, Soholefield (Crewe)
Hale, Leslie
Orbach, M.


Awbery, S. S.
Hall, Rt. Hn. Glenvil (Colne Valley)
Oswald, T.


Bacon, Miss Alice
Hamilton, W. W.
Owen, W. J.


Balfour, A.
Hannan, W.
Padley, W. E.


Bence, C. R. (Dunbartonshire, E.)
Harrison, J. (Nottingham, N.)
Paget, R. T.


Benton, G.
Hastings, S.
Paling, Rt.Hon. W. (Dearne Valley)


Beswick, Frank
Hayman, F. H.
Paling, Will T. (Dewsbury)


Bevan, Rt. Hon. A. (Ebbw Vale)
Healey, Denis
Palmer, A. M. F.


Blackburn, F.
Henderson, Rt. Hn. A. (Rwly Regis)
Pannell, Charles (Leeds, W.)


Bletikinsop, A.
Herbison, Miss M.
Pargiter, G. A.


Blyton, W. R.
Hobson, C. R. (Keighley)
Parker, J.


Boardman, H.
Holman, P.
Paton, John


Bottomley, Rt. Hon. A. G.
Holmes, Horace
Pearson, A.


Bowden, H. W. (Leicester, S.W.)
Houghton, Douglas
Peart, T. F.


Bowles, F. G.
Howell, Charles (Perry Barr)
Pentland, N.


Boyd, T. C.
Hoy, J. H.
Plummer, Sir Leslie


Braddock, Mrs. Elizabeth
Hubbard, T. F.
Popplewell, E.


Brockway, A. F.
Hughes, Cledwyn (Anglesey)
Prentice, R. E.


Brown, Rt. Hon. George (Belper)
Hughes, Emrys (S. Ayrshire)
Price, J. T. (Westhoughton)


Brown, Thomas (Ince)
Hughes, Hector (Aberdeen, N.)
Price, Philips (Gloucestershire, W.)


Burke, W. A.
Hunter, A. E.
Probert, A. R.


Butler, Herbert (Hackney, C.)
Hynd, H. (Accrington)
Proctor, W. T.


Butler, Mrs. Joyce (Wood Green)
Hynd, J. B. (Attercliffe)
Randall, H. E.


Callaghan, L. J.
Irvine, A. J. (Edge Hill)
Rankin, John


Carmichael, J.
Isaacs, Rt. Hon. G. A.
Redhead, E. C.


Castle, Mrs. B. A.
Jay, Rt. Hon. D. P. T.
Reeves, J.


Champion, A. J.
Jeger, George (Goole)
Reid, William


Chapman, W. D.
Jeger, Mrs.Lena(Holbn &amp;St.Pncs,S.)
Rhodes, H.


Chetwynd, G. R.
Jenkins, Roy (Stechford)
Robens, Rt. Hon. A.


Clunie, J.
Johnston, Douglas (Paisley)
Roberts, Albert (Normanton)


Coldrick, W.
Jones, David (The Hartlepools)
Roberts, Goronwy (Caernarvon)


Collick, P. H. (Birkenhead)
Jones, Elwyn (W. Ham, S.)
Robinson, Kenneth (St. Pancras, N.)


Collins,V.J.(Shoreditoh &amp; Finsbury)
Jones, Jack (Rotherham)
Ross, William


Cove, W. G.
Jones, J. Idwal (Wrexham)
Shinwell, Rt. Hon. E.


Craddock, George (Bradford, S.)
Jones, T. W. (Merioneth)
Shurmer, P. L. E.


Cronin, J. D.
Kenyon, C.
Silverman, Julius (Aston)


Crossman, R. H. S
Key, Rt. Hon. C. W.
Silverman, Sydney (Nelson)


Cullen, Mrs. A.
King, Dr. H. M.
Simmons, C. J. (Brierley Hill)


Dalton, Rt. Hon. H.
Lawson, G. M.
Skeffington, A. M.


Darling, George (Hillsborough)
Lee, Frederick (Newton)
Slater, Mrs. H. (Stoke, N.)


Davies, Ernest (Enfield, E.)
Lee, Miss Jennie (Cannock)
Slater, J. (Sedgefield)


Davies, Harold (Leek)
Lewis, Arthur
Smith, Ellis (Stoke, S.)


Davies, Stephen (Merthyr)
Lipton, Marcus
Sorensen, R. W.


de Freitas, Geoffrey
Logan, D. G.
Sparks, J. A.


Delargy, H. J.
Mabon, Dr. J. Dickson
Steele, T.


Dodds, N. N.
MacColl, J. E.
Stewart, Michael (Fulham)


Donnelly, D. L.
MacDermot, Niall
Stonehouse, John


Dye, S.
Mclnnes, J.
Stones, W. (Consett)


Ede, Rt. Hon. J. C.
McKay, John (Wallsend)
Strachey, Rt. Hon. J.


Edwards, Rt. Hon. John (Brighouse)
Macpherson, Malcolm (Stirling)
Strauss, Rt. Hon. George (Vauxhall)


Edwards, Rt. Hon. Ness (Caerphilly)
Mahon, Simon
Stross,Dr.Barnett(Stoke-on-Trent,C.)


Edwards, Robert (Bilston)
Mallalieu, E. L. (Brigg)
Summerskill, Rt. Hon. E.


Edwards, W. J. (Stepney)
Mann, Mrs. Jean
Swingler, S. T.


Fernyhough, E.
Marquand, Rt. Hon. H. A.
Sylvester, G. O.


Fienburgh, W.
Mason, Roy
Taylor, Bernard (Mansfield)


Finch, H. J.
Mayhew, C. P.
Taylor, John (West Lothian)


Fletcher, Eric
Mellish, R. J.
Thomas, lorwerth (Rhondda, W.)


Forman, J. C.
Messer, Sir F.
Thomson, George (Dundee, E.)


Fraser, Thomas (Hamilton)
Mitchison, G. R.
Thornton, E.


Gaitskell, Rt. Hon. H. T. N.
Monslow, W.
Timmons, J.


George, Lady Megan Lloyd(Car'then)
Moody, A. S.
Tomney, F.


Gibson, C. W.
Morris, Percy (Swansea, W.)
Ungoed-Thomas, Sir Lynn


Greenwood, Anthony
Mort, D. L.
Viant, S. P.


Grenfell, Rt. Hon. D. R.
Moss, R.
Watkins, T. E.


Grey, C. F.
Moyle, A.
Weitzman, D.




Wells, Percy (Faversham)
Willey, Frederick
Woof, R. E.


Wells, William (Walsall, N.)
Williams, David (Neath)
Yates, V. (Ladywood)


West, D. G.
Williams, Rev. Llywelyn (Ab'tillery)
Younger, Rt. Hon. K.


Wheeldon, W. E.
Williams, Ronald (Wigan)
Zilliacus, K.


White, Mrs. Eirene (E. Flint)
Williams, W. R. (Openshaw)



White, Henry (Derbyshire, N.E.)
Willis, Eustace (Edinburgh, E.)
TELLERS FOR THE AYES:


Wigg, George
Wilson, Rt. Hon. Harold (Huyton)
Mr. Short and Mr. Deer.


Wilkins, W. A.
Woodburn, Rt. Hon. A.





NOES


Agnew, Sir Peter
Duthie, W. S.
Jenkins, Robert (Dulwich)


Aitken, W. T.
Eden, J. B. (Bournemouth, West)
Jennings, J. C. (Burton)


Allan, R. A. (Paddington, S.)
Elliot, Rt. Hon. W. E. (Kelvingrove)
Jennings, Sir Roland (Hallam)


Alport, C. J. M.
Elliott,R.W.(N'castle upon Tyne,N)
Johnson, Dr. Donald (Carlisle)


Amery, Julian (Preston, N.)
Emmet, Hon. Mrs, Evelyn
Johnson, Eric (Blackley)


Arbuthnot, John
Errington, Sir Eric
Jones, Rt. Hon. Aubrey (Hall Green)


Armstrong, C. W.
Erroll, F. J.
Joseph, sir Keith


Ashton, H.
Fell, A.
Joynson-Hicks, Hon. Sir Lancelot


Astor, Hon. J. J.
Finlay, Graeme
Keegan, D.


Atkins, H. E.
Fisher, Nigel
Kerby, capt. H. B.


Baldock, Lt. Cmdr. J. M.
Fletcher-Cooke, C.
Kerr, Sir Hamilton


Baldwin, A. E.
Fort, R.
Kershaw, J. A.


Balniel, Lord
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Kimball, M.


Barlow, Sir John
Freeth, Denzil
Kirk, P. M.


Barter, John
Galbraith, Hon. T. G. D.
Lagden, G. W.


Baxter, Sir Beverley
Gammans, Lady
Lambert, Hon. G.


Beamish, Maj. Tufton
Garner-Evans, E. H.
Lambton, Viscount


Bell, Philip (Bolton, E.)
George, J. C. (Pollok)
Lancaster, Col. C. G.


Bell, Ronald (Bucks, S.)
Gibson-Watt, D.
Leather, E. H. C.


Bennett, F. M. (Torquay)
Glover, D.
Leavey, J. A.


Bennett, Dr. Reginald
Glyn, Col. R.
Leburn, W. G.


Bevins, J. R. (Toxteth)
Godber, J. B.
Legge-Bourke, Maj. E. A. H.


Bidgood, J. C.
Gomme-Duncan, Col. Sir Alan
Legh, Hon. peter (Petersfield)


Biggs-Davison, J. A.
Goodhart, Philip
Lindsay, Hon. James (Devon, N.)


Birch, Rt. Hon. Nigel
Gower, H. R.
Linstead, Sir H. N.


Bishop, F. P.
Graham, Sir Fergus
Lloyd, Maj. Sir Guy (Renfrew, E.)


Black, C. W.
Grant, W. (Woodside)
Longden, Gilbert


Body, R. F.
Grant-Ferris, Wg Cdr. R. (Nantwich)
Lucas, Sir jocelyn (Portsmouth, S.)


Boothby, Sir Robert
Green, A.
Lucas, P. B. (Brentford &amp;Chiswick)


Bossom, Sir Alfred
Gresham Cooke, R.
Lucas-Tooth, Sir Hugh


Bowen, E, R. (Cardigan)
Crimond, J.
McAdden, S. J.


Boyd-Carpenter, Rt. Hon. J. A.
Grimston, Hon. John (St. Albans)
Macdonald, Sir Peter


Braine, B. R.
Grlmston, Sir Robert (Westbury)
Mackeson, Brig, Sir Harry


Braithwaite, Sir Albert (Harrow, W.)
Hall, John (Wycombe)
Mackie, J. H. (Galloway)


Brooke, Rt. Hon. Henry
Harris, Reader (Heston)
McLaughlin, Mrs. P.


Brooman-White, R. C.
Harrison, A. B. C. (Maldon)
Maclay, Rt. Hon. John


Browne, J. Nixon (Craigton)
Harrison, Col. J. H. (Eye)
Maclean, Sir Fitzroy (Lancaster)


Bullus, Wing Commander E. E.
Harvey, Sir Arthur Vere (Macclesfd)
McLean, Neil (Inverness)


Burden, F. F. A.
Harvey, Ian (Harrow, E.)
MacLeod, John (Ross &amp; Cromarty)


Butcher, Sir Herbert
Harvey, John (Walthamstow, E)
Macmillan,Rt.Hn.Harold(Bromley)


Butler,Rt.Hn.R.A.(Saffron Walden)
Hay, John
Macpherson, Niall (Dumfries)


Campbell, Sir David
Head, Rt. Hon. A. H.
Maddan, Martin


Carr, Robert
Heath, Rt. Hon. E. R. G.
Maitland, Cdr. J. F. W.(Horncastle)


Cary, Sir Robert
Henderson, John (Cathcart)
Maitland, Hon. Patrick (Lanark)


Channon, Sir Henry
Henderson-Stewart, Sir James
Markham, Major Sir Frank


Chichester-Clark, R.
Hesketh, R. F.
Marlowe, A. A. H.


Clarke, Brig. Terenoe (Portsmth,W.)
Hioks-Beaoh, Maj. W. W.
Marples, Rt. Hon. A. E.


Cole, Norman
Hill, Rt. Hon. Charles (Luton)
Mathew, R.


Conant, Maj. Sir Roger
Hill, Mrs. E. (Wythenshawe)
Maude, Angus


Cooke, Robert
Hill, John (S. Norfolk)
Maudling, Rt. Hon, R.


Cooper, A. E.
Hinchingbrooke, Viscount
Mawby, R. L.


Cooper-Key, E. M.
Hirst, Geoffrey
Maydon, Lt.-Comdr, S. L. C.


Cordeaux, Lt.-Col. J. K.
Hobson, John(Warwick &amp; Leam'gt'n)
Milligan, Rt. Hon. W. R.


Corfield, Capt, F. V.
Holt, A. F.
Moore, Sir Thomas


Craddook, Beresford (Spelthorne)
Hope, Lord John
Morrison, John (Salisbury)


Crosthwaite-Eyre, Col. O. E.
Hornby, R. P.
Nairn, D. L. S.


Crowder, Sir John (Finchley)
Hornsby-Smith, Miss M. P.
Nicholls, Harmar


Crowder,Petre(Ruislip—Northwood)
Horobin, Sir Ian
Nicholson, Godfrey (Farnham)


Cunningham, Knox
Horsbrugh, Rt. Hon. Dame Florence



Currie, G. B. H.
Howard, John (Test)
Nicolson, N. (B'n'm'th.E. &amp; Chr'ch)


Dance, J C. G.
Hudson, W. R. A. (Hull, N.)
Noble, Comdr. Rt. Hon. Allan


Davidson, Viscountess
Hughes Hallett, Vice-Admiral J.
Oakshott, H. D.


Davies,Rt.Hn.Clement(Montgomery)
Hughes-Young, M. H. C.
O'Neill, Hn.Phelim (Co. Antrim, N.)


D'Avigdor-Goldsmid, Sir Henry
Hulbert, Sir Norman
Orr, Capt. L. P. S.


Deedes, W. F.
Hurd, A. R.
Orr-Ewing, Charles Ian(Hendon, N.)


Digby, Simon Wingfield
Hutchison, A. M. C. (Ed'burgh, S.)
Osborne, C.


Dodds-Parker, A. D.
Hutchison, Sir Ian Clark(E'b'gh, W.)
Page, R. G.


Donaldson, Cmdr. C. E. McA.
Hutchison, Sir James (Scotstoun)
Pannell, N, A. (Kirkdale)


Doughty, C. J. A.
Hyde, Montgomery
Partridge, E.


du Cann, E. D. L.
Hylton-Foster, Rt. Hon. Sir Harry
Peyton, J. W. W.


Dugdale, Rt. Hn. Sir T. (Richmond)
Iremonger, T. L.
Pickthorn, K. W. M.


Duncan, Capt. J. A. L.
Irvine, Bryant Godman (Rye)
Pike, Miss Mervyn







Pilkington, Capt. R. A.
Smithers, Peter (Winchester)
Tllney, John (Wavertree)


Pitman, I. J.
Smyth, Brig. Sir John (Norwood)
Turner, H. F. L.


Pitt, Miss E. M.
Spearman, Sir Alexander
Turton, Rt. Hon. R. H.


Powell, J. Enoch
Speir, R. M.
Tweedsmuir, Lady


Price, David (Eastleigh)
Spence, H. R. (Aberdeen, W.)
Vaughan-Morgan, J. K.


Price, Henry (Lewisham, W.)
Spens Rt. Hn. Sir P. (Kens'gt'n, S.)
Vikers, Miss Joan


Prior-Palmer, Brig. O. L.
Stanley, Capt. Hon. Richard
Wade, D. W.


Raikes, Sir Victor
Stevens, Geoffrey
Wakefield, Sir Wavell (St. M'lebone)


Ramsden, J. E.
Steward, Harold (Stockport, S.)
Walker-Smith, Rt. Hon. Derek


Rawlinson, Peter
Steward, Sir William (Woolwich, W.)
Wall, Major Patrick


Redmayne, M.
Stoddart-Scott, Col. Sir Malcolm
Ward, Rt. Hon. G. R. (Worcester)


Remnant, Hon. P.
Storey, S.
Ward, Dame Irene (Tynemouth)


Renton, D. L. M.
Studholme, Sir Henry
Waterhouse, Capt. Rt. Hon. C.


Ridsdale, J. E.
Taylor, Sir Charles (Eastbourne)
Watkinson, Rt. Hon. Harold


Robertson, Sir David
Taylor, William (Bradford, N.)
Whitelaw, W. S. I.


Robinson, Sir Roland (Blackpool, S.)
Teeling, W.
Williams, Paul (Sunderland, S.)


Rodgert, John (Severnoaks)
Temple, John M.
Williams, R. Dudley (Exeter)


Roper, Sir Harold
Thomas, Leslie (Canterbury)
Wills, G. (Bridgwater)


Sctiofield, Lt.-Coi. W.
Thomas, P. J. M, (Conway)
Wood, Hon. R.


Scott-Miller, Cmdr. R.
Thompson, Kenneth (Walton)
Woollam, John Victor


Sharples, R. C.
Thompson, Lt.-Cdr.R.(Croydon, S.)
Yates, William (The Wrekin)


Shepherd, William
Thorneycroft, Rt. Hon. P.



Simon, J. E. S. (Middlesbrough, W.)
Thornton-Kemsley, C. N.
TELLERS FOR THE NOES:




Mr. Barber and Mr. Bryan.

New Clause.—(EXEMPTION FROM TAXATION OF PAYMENTS OF COMPENSATION TO VICTIMS OF NAZI OPPRESSION.)

Compensation for loss of life, or for injury to body or health, or for loss of profession, trade or managerial position, or dismissal from employment, or for loss of pension rights, paid out of German public funds under the laws of the Federal Republic or the Länder (States) of the Federal Republic of Germany to victims of National Socialist persecution shall be excluded from the compensation of income for the purposes of the enactments relating to income tax and surtax in any year in which such compensation has been or is so paid and any assessments made as regards sums so received in compensation shall be revised accordingly and repayment of any tax paid in respect thereof shall be effected or allowed for in any subsequent assessment.—[Mr. J. Foster.]

Brought up, and read the First time.

Mr. John Foster: I beg to move, That the Clause be read a Second time.
The object of this Clause is to exempt from taxation in the United Kingdom certain payments which are made by the German Government to victims of Nazi oppression. I could make a rather lawyer-like list of the various forms of compensation paid by the German Government, but that might bore the House.
The position, in layman's language, is that the German Government have decided to make compensation, inadequate though it must be, to victims of Nazi persecution and, as the compensation is in the nature of an extraordinary payment and from that point of view does not have the aspect of an income payment, the German Government, quite properly, have decided that these payments should not be subject to German

Income Tax. The British Government, on the other hand, decided that these payments—and I am speaking about the whole category—should be liable to United Kingdom Income Tax.
The result is that the British Government are getting the advantage of the remission of German Income Tax. This means that, at the expense of the German taxpayer and of the victim, the British Government are receiving an extra amount of tax, namely, the tax which the German Government remitted to the victim. I submit that this is unfair, and the object of the Clause is to try to remedy the injustice. It is unnecessary to stress to the House the peculiar nature of these payments. They do not partake, from a commonsense point of view, of the nature of payments of income at all. Technically, they come under United Kingdom Income Tax law because they are paid at intervals.
It may be found that certain categories may yet be exempt. It would be interesting to know from the Financial Secretary that that is the case, but that does not affect the principle which, I should have thought, must be that on moral grounds the United Kingdom Government are not justified in levying tax on compensation paid to these unfortunate victims. This moral argument finds favour with the Governments of the United States, Sweden and Holland. In all those countries legislation has been passed on the lines o f this Clause, because they feel that it is not right for their Government to take advantage of a remission of this tax made by the German Government and put it in their own pockets.
6.15 p.m.
That is the short point. It is surrounded by a number of technicalities. It would be possible, perhaps, to distinguish one payment from another, but it is better to leave the House with the broad point of principle. It is a moral point, and we have found in our history that our Governments have not been insensitive to moral points of view. I am prepared to concede that technically these payments are liable to United Kingdom Income Tax, but I submit that when compensation is paid to somebody who may have lost his nearest relatives in some concentration camp, or to somebody who has serious bodily injury or has lost his self-employment or employment through Nazi outrages, it is entirely morally wrong for Her Majesty's Government to levy a tax which is increased by the amount that the German Government have remitted to the victim.
There is one technical point that I want to bring to the notice of the House. It has been said, in correspondence, by the Inland Revenue that it would be difficult to do what the Clause proposes without creating a precedent. Other Governments have found it possible to do it without creating a precedent. It is also suggested that this is rather like a widow's pension, but in my submission it has no relation to that at all. The Inland Revenue argues that if we exempt from tax this payment of compensation we should be creating a precedent for letting off widows' pensions in this country, or we should be creating anomalies between these payments and widows' pensions in the United Kingdom.
There are several answers to that. First, the German Government have calculated these payments on the footing that Income Tax would not be paid, and yet the United Kingdom Government come along and take 8s. 6d. in the £. Widows' pensions in this country have an earned-income relief allowance, but I understand that the Inland Revenue here denies this relief to these periodical payments. If that is so, it shows that the payments are of a different kind.
I submit that there is an important moral point in the Clause, and I ask the Financial Secretary to look at it. He need not accept the Clause. It would be quite easy for him to do by administrative concession what the Clause proposes. It is

not necessary for the Clause to be passed by the House, but it is an indication to my hon. Friend that he should recognise the strength of the moral principle underlying it.

Sir Thomas Moore: I beg to second the Motion.

Mr. J. Grimond: I want to say a few words in support of what has been said by the hon. and learned Gentleman the Member for Northwich (Mr. J. Foster). I have no doubt that the sympathy of the Treasury will be entirely with the victims of Nazi oppression whom this proposed Clause is designed to help. I have also no doubt that the Treasury has interpreted the existing Clause strictly, and correctly, because if there is any change in Treasury practice it must come from this House and nowhere else.
I urge upon the Minister that there seems to be, at least prima facie, a strong case for making an exception to the general rule for these unfortunate people. As the mover of the Motion has said, it is a curious definition of income when it includes compensation of this kind which I rather think, although it is paid periodically, will not last for very long. Although it is not the business of the Treasury to decide how this money was earned, there seems to be a strong case for compassion in this instance.
There also seems to be a compassionate argument in favour of a definite and restricted class. No doubt the tax argument against it will be that it would create a precedent and that it would be difficult to know where the process should stop. The possibility of extension to widows has been mentioned. Yet if the precedent is morally extended to people in a like position, that is to say, to refugees and people to whom compensation is being paid, I cannot see that it will be anything but a good precedent.
I sometimes think that we are over-nervous of precedents on the ground that all precedents are necessarily bad. I cannot believe that there will be a large leakage from the Treasury if this precedent is extended even to all people who could claim to be in a similar position, that is to say, that they were in receipt of payments by way of compensation for harm or loss caused to them by oppression. An additional argument is that


they have been relieved of tax liability by the Government which is making the payments.
I do not think that there is much purpose in going into the technical details of the matter. No doubt these have been studied by the Treasury, which is well versed in the law as it stands. However, I make my plea to the Minister that there seems here to be a case for the exception of a narrow class of deserving people, and the plea is greatly strengthened by the fact that other countries have found it possible to relieve these people of taxation and so has enabled them to receive their payments in full.

Mr. Sydney Silverman: I will not detain the House long in speaking in support of the Clause. My point arises out of the suggestion that in some way, if the Government were to do what is asked of them, they might be creating a precedent. I confess that I do not quite follow the meaning of that argument.
We are dealing here with the handful of survivors of a unique historical event. I do not think there has been at any other time in world history such a mass crime as was committed in Germany in the circumstances which are referred to in this proposed Clause. It is not, one would suppose, a matter which would ever be repeated, and if it is not a matter which will be repeated, then I suppose there is little ground for fearing that there will ever be any other class of persons on whose behalf the same claim can be made by relying on this category as a precedent.
Indeed, one of the few—and I say "few" advisedly—bright things in the post-war world is that the German people have brought themselves to admit guilt in this matter. Although there can be no real reparation, having regard to the nature of the crime, at any rate it would be something to agree to pay to those who survive a slight measure of compensation, but they have gone rather beyond that. They have paid quite large sums of reparation which the State of Israel has been able to use for constructive purposes.
If anything could serve to lessen the human guilt involved in the original events, it is the fact that the German

people, or a great many of them—one likes to think a majority—look with shame upon their record in this matter and are prepared to do something to make good some part of the material loss to those who survive.
In those circumstances it seems a little, shall we say, out of the national character for this country to levy a revenue tax upon compensation of that kind. It is not like us to do it. In the old days, when all our passions ran so high about the German nation, one would have said then—although I think it would not have been true—that it was completely outside the German character that they could be brought to admit guilt and pay some kind of reparation. But if, in those days, we had imagined such a possibility, who would have imagined that a British Government, when that came to pass, would have thought that they were entitled, or morally justified, in having some kind of rake-off in this way? I hate to use the word "rake-off," but ugly words sometimes bring out a point more clearly.
It is difficult to say how these payments could even technically be regarded as income, but, like other hon. Members, I do not want to go into the technical aspects. It is certainly not property which produces income. It is certainly not a gainful occupation or the reward of one. No one goes in for being a refugee of this kind in order that people earn the kind of reward for it that is being paid. So I am not certain on what technical basis it is held that this is income in that sense.
But let us suppose that it is income. Let us suppose that all the law and all the technicalities and all the legal arguments entitle us to charge it with tax. I think that we would say to the Government, "Nevertheless, do not charge it, since the United States, Sweden, Holland and Germany have agreed not to do so. Poverty stricken as we no doubt are, in spite of our need for revenue, we do not really need to take it in this way." I hope, therefore, that the hon. Gentleman will be able to say, whether he accepts the Clause or not, that a charge of this kind will not be made.

6.30 p.m.

Mr. Powell: It is impossible to approach the subject matter of the new Clause without emotion and without


evoking associations which, in our different ways, we all have in our minds; but in considering the Clause I must ask the House not to take counsel of emotion too far but to look dispassionately not only at what is proposed, but at its wider bearings.
The new Clause would deal with four classes of case. It deals, first, with periodical payments to persons who have suffered injury to body or health. I can deal with that straight away, because I can tell the House that those annuities do not attract Income Tax. The new Clause then deals with compensation for loss of life, that is to say, annuities paid to the relatives—in the majority of cases, I suppose, to the widows—of those who lost their lives in Germany. It deals, thirdly, with those in receipt of annuities for loss of position or dismissal from employment and, finally, with annuities for loss of pension rights.
I will take the last of those three remaining types of case first, annuities which are for loss of pension rights. It is evident that since those are in substitution for a pension, the nature of such payments must be of the nature of a pension and subject to tax in the same way as a normal pension. I add, however, that this class of case has not actually been referred to the Inland Revenue and that, therefore, is a provisional view. Of course, particular circumstances will be investigated to ascertain whether such payments do fall to be treated as equivalent to a pension.

Sir Hugh Lucas-Tooth: Is my hon. Friend dealing with the case of those losing public pensions?

Mr. Powell: I am dealing with the fourth of the cases covered in the new Clause, annuity payments specifically for loss of pension rights. I was not dealing with, and I am now coming to, annuity payments which are for compensation for loss of husband or relative, or compensation for loss of a position or employment. It is extremely difficult, indeed I put it to the House that it is impossible, to distinguish the situation of the widow of a victim of German persecution from that of a British war widow whose husband was killed in the war against Germany and perhaps done to death in a German prison.

Whatever the emotions and prejudices with which we all approach the subject matter of the new Clause, we cannot imagine that it could be right to put those widows' pensions—and they will be mostly widows' annuity payments—in a different and preferential position compared with the payments to war widows. Under our law—and that is not under discussion at the moment—war widows' pensions are treated, as are other widows' pensions, as a form of income. It would be impracticable, unjust and would, sooner or later, and probably sooner, arouse serious ill-feeling if we were to give this privilege to the annuity payments which are compensation for loss of life.
Finally, there are annuity payments for loss of position or dismissal from employment. I have made careful inquiries into the treatment of similar payments which are made in other circumstances where a person loses his employment or is dismissed prematurely and is compensated for it by annuity. I am assured that in those cases there is no doubt that it would be treated as taxable income. There again the difficulty arises of distinguishing between a German, perhaps a Jewish, professor who lost his chair in the 1930s and who, as an elderly man, is now receiving annual compensation, and an Englishman who lost his employment, perhaps under very unfortunate circumstances, and who, in consequence, is in receipt of an annuity.

Mr. S. Silverman: Does it not make some slight difference—it may not be conclusive—that the compensation for the people the subject of this Clause was calculated or assessed on the assumption that tax would not be paid?

Mr. Powell: I am coming to that. The underlying principle here is that there must be parity of treatment for similar income received by those who are liable to tax in this country.
We cannot make a distinction between one kind of income and another, either on the basis of the circumstances in which that income arose, or—and now I come to the point of which the hon. Member for Nelson and Colne (Mr. S. Silverman) reminded me—the tax treatment of that income in the foreign country in which it arises. It would he impracticable for us to treat incomes received and enjoyed by British taxpayers differently according to the tax law of the country in which they


originated, even where, as here, those tax laws have been deliberately and for political and possibly moral purposes framed in a special way.
We cannot be guided by supposed analogies with the treatment of these payments by other countries. For example, I understand that the United States treats them as not liable to tax, but the United States, also under its law, treats war widows' pensions as not liable to tax.
The House will see that the only practicable course is for us to maintain consistency in our own tax code and treat within that code similar income in a similar way, irrespective of the original circumstances and irrespective of foreign tax. I therefore ask the House not to make this alteration in the law. At the same time, I say that every type of annuity payable by the German Government will be carefully investigated by the Inland Revenue and by Her Majesty's Government to ensure that it is treated fairly and on all fours with comparable income arising in this country.

Mr. Douglas Houghton: I am sure that hon. Members on both sides of the House will sympathise with the Financial Secretary for having had to give an explanation of this Clause, an explanation which I am sure came unpalatably to him. We all listened to the persuasive arguments of the hon. and learned Member for Northwich (Mr. J. Foster), and noticed the response of the House to what he said.
This is a matter which is bound to excite our sympathy and our compassion with victims of Nazi persecution and cruelty. Many endured horrible sufferings and suffered grievous losses. We wish that we could exempt money compensation for their sufferings and losses from United Kingdom Income Tax. At the same time, I think that the Financial Secretary has done his duty in warning the House that we should probably be treading a very difficult path if we were to follow the course proposed in the Clause. The hon. Gentleman has already given us the example of a soldier in the British Army, shot in cold blood by his captors, whose widow receives a pension which is taxable. It may be that some of the forms of compensation coming within the scope of the

new Clause would be little more than money compensation for dismissal and deportation from the country concerned before the war started, or on behalf of a professor or other person who just managed to escape from potential danger and was dismissed or sentenced to some punishment in his absence. All these difficult types of case might come within the scope of the Clause.
I think that the hon. and learned Member for Northwich was advocating a most dangerous doctrine if he wanted the House to accept a comprehensive administrative concession upon matters of tax liability. We cannot concede to the Commissioners of Inland Revenue too much discretion in the levying of taxes imposed by this House. They are entrusted by Letters Patent with the care and management of the Income Tax Acts, and they must discharge that duty fairly and fearlessly. The degree of discretion left in their hands to ease the tax burden on the citizen is necessarily narrow.

Mr. J. Foster: I would ask the hon. Member two questions. First, did he approve of the extra-statutory concession given during the war to refugees, exempting them from tax in respect of foreign-owned securities? Secondly, does he think it right that these claims for periodical payments for loss of life should not have the benefit of an earned income concession while widows' pensions in England do?

Mr. Houghton: There may be some anomalies in the methods of taxing various payments which are made. Some anomalies may be merely reflections of the same sort of thing that exists in our own internal tax arrangements. If there are any which need remedying the House can attend to them. But I am sure that we have realised in the past that one concession, very often justified in isolation, swiftly creates a sense of injustice when a further comparable and equally deserving concession is asked for and difficulties are found in extending the scope of what has been done on previous occasions.
We also have to consider whether it would be proper to grant this concession not to the victims of persecution generally, but to the victims of a particular form of persecution, namely Nazi persecution. No doubt there are some


payments coming from Japan at present which might equally be brought within the scope of the Clause.

Mr. S. Silverman: I think that I am right in saying that the agreed compensation paid by the Japanese and distributed here was regarded as a payment not subject to Income Tax.

Mr. Powell: Of course, it is not paid as an annuity.

Mr. Houghton: There are other payments being made by Japan apart from the distribution from Japanese blocked assets, which were the subject of an agreement between the British and Japanese Governments. But we have to consider the position of those who suffer here from negligence on the roads, and injury and death sustained at work. Many difficulties of that kind are bound to arise in taxation law.

Mr. Silverman: I really cannot see the force of this part of my hon. Friend's argument. I have never heard that compensation paid for damages in a road accident is subject to Income Tax.

6.45 p.m.

Mr. Houghton: My hon. Friend may remember that on 6th January, 1956, there was a very important case in the House of Lords — the British Transport Commission v. Gourley—where consideration was given to the question whether a lump sum payment for loss of earnings should be written down—

Mr. Silverman: No, no, no.

Mr. Houghton: My hon. Friend says, "No, no, no." I wish that he would allow me to complete what I am saying. The House of Lords decided that a lump sum payment by way of compensation for loss of earnings could be written down by the court to take account of the taxation which would have been borne on those earnings had they been received. That was the point at issue in that case.

Mr. Silverman: What has that to do with this case?

Mr. Houghton: My hon. Friend asks what it has to do with this case. It has this to do with it—that payments which represent annual payments and which are income in the hands of the recipients are, generally speaking, taxable according to

our tax law. Certain forms of lump sum compensation, while not taxable, may be modified in amount on account of the indirect relief from tax which would otherwise be given.
I do not rely solely upon those illustrations, by any means, for bringing to the notice of the House the obvious difficulties which the Clause would create in all sorts of directions. We cannot ignore the fact that persons who receive different forms of compensation for injury and death in this country pay tax according to the law, and there seems to be no real justification for treating similar payments made by Germany differently from those made by employers or other persons responsible for paying compensation for injuries inflicted to citizens at home.
At all events, I think that the House will agree that the difficulties confronting the Legislature in giving this type of special exemption are formidable indeed, and would carry us much further than we realise at the moment. The full extent to which they would carry us would be appreciated only if we followed the course of the concession right through our taxation system, and considered its effect upon payments very similar to these, or even identical in kind, but made from other sources and in different circumstances. I could not advise my right hon. and hon. Friends to press the Minister to accept the Clause, or to invite the House to divide in favour of it.

Sir H. Lucas-Tooth: I do not in any way quarrel with the principles which have just been enunciated by the hon. Member for Sowerby (Mr. Houghton), but I do not think that they are altogether applicable in this case. He cited a decision of our courts that payment by way of damages could be reduced in respect of Income Tax. We have no knowledge of the extent to which this payment may have been reduced by the German Government in consideration of German Income Tax law, and that alone stultifies the hon. Member's argument in this case.
I have had considerable correspondence with my hon. Friend the Financial Secretary about a very closely analogous case concerning the pensions payable by the German Government to ex-German public servants. He will remember that we had a very considerable and extended correspondence in this matter, and that he


finally wrote to me a letter which I accepted.
I should like to read an extract from that letter, as I think that it has a bearing on the principle in this case:
… I promised to ascertain the basis of payment of these pensions, as we both agreed that this should make the question of taxability fairly clear one way or the other.
In other words, it was not the fact of being a pension that was important, it was the basis on which that pension is assessed.
… If the official is not offered, or does not wish to accept, reinstatement—and this must include all the persons at present living in the United Kingdom—he is given until he reaches normal retiring age a 'pension' equal in amount to the emoluments he would have received on reinstatement; after he reaches retiring age he is given the normal pension based on those emoluments. If the official was over the retiring age, or was incapable of working, before the Law came into force, he is entitled to receive the pension he would have had if he had remained in employment …
In that case, pensions were normally assessed on the basis that they were pensions in the normal sense of the word; something equivalent as a pension to what they were replacing and which were intended, so far as I know, to be payable throughout the lives of the recipients. It seems to me that the present case is different. Here the payments are not, as I understand, necessarily based on any conception of being equivalent to the amount that they are replacing. Indeed, the German Government have drawn the distinction that whereas the pensions given to former public servants, the ones which I have been discussing with my hon. Friend, are taxable in Germany, the German Government have freed from tax the payments we are now considering. So there is a distinction made in the basis of those payments on the part of the payers, the German Government.
I should imagine that if we examined these pensions carefully, we should find that they were much more in the nature of damages payable over a period of time and, indeed, I believe I am right in saying that in some cases, if not in all, there is an actual total limit of the amount so payable. I understand that in some cases there is a limit of 25.000 Reichmarks. If that be so, clearly these payments must contain something in the nature of a capital element which should

not be wholly assessed for Income Tax purposes. I do not wish to go into the technicalities of this matter, but my hon. Friend has given a somewhat technical answer, and I thought it fair to say that there is some technical argument the other way.
I would not press the House to accept this Clause, because I think it may well be that the objections against the wording of this Clause advanced by my hon. Friend and by the hon. Member for Sowerby are sound. I do not think that my hon. Friend would disagree with that. He opened his remarks by saying that probably what is necessary to be done is to reconsider all this matter in the Treasury. I ask my hon. Friend to reconsider it in the light of the remarks which have been made today. If, by other means than legislation, he can bring about some of the results we wish, that would certainly benefit a number of hard and deserving cases

Mr. Austen Albu: With his usual clarity, my hon. Friend the Member for Sowerby (Mr. Houghton) has put the difficulties which arise in making discrimination in taxation as between individuals. The Financial Secretary, naturally, has put forward difficulties from his point of view. He asked us to discuss this matter without emotion. That is not an easy thing to do for those people who may have relations or friends—as have most of us who happen to be of the Jewish race—who have suffered in this way. The only reason that I intervene in this discussion is to ask the Financial Secretary to look again at some of the arguments advanced by the hon. Member for Hendon, South (Sir H. Lucas-Tooth).
If it be the fact that these sums, call them pensions or what you will, are not the full sums which would have been paid for pension or compensation had they been subject to tax in the country of origin, in Germany, then it seems to me that they could well be looked at in a different way when they are received in this country. Because if they were the full sum which would normally be subject to tax, the arguments advanced from both Front Benches may well apply. But I understand that that is not the case.
I hope that the Financial Secretary will not close his mind and his heart to this matter, but will examine it again and see whether a ruling can be given, if not


in the full terms of this proposed new Clause, at any rate taking account of the arguments which have been put forward. I hope that what the hon. Gentleman has said does not represent his last thoughts on the matter.

Sir Leslie Plummer: I am sure that my hon. Friend the Member for Sowerby (Mr. Houghton) gave careful thought to the facts contained in the lucid and logical speech which he has just concluded. It would be unlike my hon. Friend if he did not pay meticulous attention to the problem presented to the House on a matter of this kind. I am sure that he spoke officially from the Front Bench. I am speaking as a Member of the House of Commons and I wish to say that in putting forward the difficulties of Income Tax collectors, or assessors, or whoever handles these problems, my hon. Friend fails, in my opinion, to recognise that compassion should be given to the people suffering at the present time and who would be assisted were this proposed Clause accepted.
I would have thought that the difficulties of Income Tax collectors would be removed were such a Clause put on the Statute Book. I would have thought that, armed with the authority of Parliament, the difficulties of those responsible for the collecting or assessing or fixing of tax would be reduced and in some cases removed. After all, the officials who have to operate our tax collecting machinery are well versed and accustomed to having to discriminate in some way or another. They find no difficulty in discriminating between the amount of tax to be levied on the estate of a man who leaves his fortune in land and that of a man who leaves his fortune in equities or stocks and shares of one kind or another.
I do not think that the Financial Secretary should suggest that we should not review this problem with compassion. It will be a sad day for this nation when the House of Commons rejects compassion as an argument. The argument has also been adduced that a Jewish professor who was fired out of his job in the 1930s should not be treated differently from a professor in this country who, by an unfortunate accident, may have lost his job and is receiving compensation. But there is all the difference in the world between the German professor who has been

derided and held up to calumny and has had physical assaults on him, and every vile infliction that the Nazis could think of put on him, and a man who may have lost a job in this country, but who is, at the same time, treated respectably and regarded as a respected member of society.
I know that this is a compassionate argument and that it is very difficult for logicians to say that it should be accepted. But there comes a time when, in my view, logic and the administrative needs should give way to compassion. I put this to the Financial Secretary for reconsideration and I wish to support what has been said by my hon. Friend the Member for Edmonton (Mr. Albu).
7.0 p.m.
The intention of the German Government in their treatment of these people was not that these people should receive full compensation for all that they have suffered. None of the people could receive more than a tithe of what they were entitled to if their injuries had been the result, say, of a road accident. They get only a tithe of what any civilised nation would regard as their just due. For us to say that we shall take some portion of that for ourselves is to admit that the passage of time has hardened our consciences which, at one time, were alive and alert to the sufferings inflicted on these harmless and innocent people by one of the worst Governments the world has ever known.
We all have sympathy for the Income Tax administrators and for the Treasury, but both Departments can get along and have plenty of people to support them. It is our responsibility to help, by our compassion and our actions, the people who have borne the hardships, cruelties and bestialities that would have been our lot if we had lost the war.

Mr. John McKay: We have to find what is the fair thing to do. The Financial Secretary to the Treasury and my hon. Friend the Member for Sowerby (Mr. Houghton) have dealt very fully with the facts of the situation. They showed that this is a special plea for certain classes and that we might remember classes of our own people who have more reason to ask for help.
Millions of our own people have been crying out for help to enable them to


live in a satisfactory way. They, also, are pensioned people. Despite all the pleas that have been made for the special class referred to in the proposed new Clause, I am sure that a much stronger plea could be made for our own people living in our own country, some of whom have not much longer to live. This is special pleading for a section of the community who, apparently, are able to pay taxes. Their incomes are at least large enough to enable them to pay taxes and to have a good standard of life. We have not been told their incomes; we are rather at sea with regard to them. Some hon. Gentlemen have been making this special plea for tax relief, while allowing the taxes on other people to be increased.
Where does justice lie? Knowing how we are penalising millions of our people who are not taxed because they have not a standard of life which we think is reasonable, are we justified in giving special opportunities and tax relief to sections of the community who have had large incomes? A more logical case than has been put by the Financial Secretary and my hon. Friend the Member for Sowerby could not be presented. I am surprised that any hon. Member should join in the special pleading on a basis of compassion. If people are to be helped, let it be those who are not Income Tax payers.

Major W. Hicks Beach: As I understand the position, a tax allowance is given in Germany to the unfortunate people who are receiving these compensation payments. Is it not a sound proposition that in this country the appropriate tax allowance at the German rate should be allowed as a deduction from the tax assessment? That would be in the nature of tax relief, and seems a reasonable compromise which should be easy to administer. I hope that the Government will consider whether something cannot be done to help these unfortunate people along the lines which I have suggested.

Question put, and negatived.

New Clause.—(DEPLETION ALLOWANCE FOR UNITED KINGDOM MINERALS.)

Subsection (1) of section three hundred and five of the Income Tax Art, 1952, shall be amended by the insertion at the end of paragraph (b) of the fallowing words—
or

(c) on the acquisition of, or rights in or over, the deposits;
and by the deletion of proviso (ii) to the said subsection:

Provided that no company or person shall by virtue of this section be liable to pay any more tax than that company or person would have been liable to pay if this section had not been passed.—[Mr. Stevens.]

Brought up, and read the First time.

Mr. Geoffrey Stevens: I beg to move, That the Clause be read a Second time.
My intention is to give to our extractive industries operating in this country a tax allowance in respect of wastage through consumption of the raw materials of their trade.
The present position ignores the very important fact that every prudent undertaking of this kind has in the past acquired deposit lands containing gravel, ore, chalk, or whatever it may be, sufficient for its needs for many years ahead. This is done for two very good reasons: the incidence of various Town Planning Acts and because certain of these extractive industries make use of extremely expensive capital equipment. Only if the undertaking can be guaranteed a number of years' continuous use of that capital equipment can the equipment be economically used.
It now seems that prudent companies which have protected themselves against the future are to be penalised while undertakings which have led and are leading a hand-to-mouth existence are benefiting and, unless something on the lines of the proposed new Clause is enacted, will continue to benefit in the future.
The matter has twice been the subject of investigation. The first investigation was by the Tucker Committee on the Taxation of Trading Profits. In paragraph 234 of its Report the Committee said:
It will be sufficient for us to record our view that the business profits of a concern of the kind in question"—
that is, an extractive industry—
cannot be properly computed without a proper allowance for depletion of minerals.
Again, in paragraph 238, the Report said:
We cannot do more than record our view that the operating company's profits are not properly computed unless it receives an allowance based on the full amount which it has expended on the acquisition of the minerals.


It is true that the Committee qualified that view by referring to the position of the vendor of those lands, who perhaps has received a good price for them. In the same paragraph the Committee raised the question of the position of the seller where some part or the whole of the proceeds of the sale might perhaps be subject to tax.
It was for that reason that the Committee said that a final decision on this point was outside its terms of reference, and that it was a proper subject for consideration by the Royal Commission on the Taxation of Profits and Income. That Royal Commission gave very close consideration to this problem, and paragraph 427 of its Report says:
We have reviewed the existing method of computing the profits of mining ventures for the purposes of taxation.
Leaving the rest of the paragraph, and turning to paragraph 428, we find this:
We came to the conclusion that these complaints against the existing method were justified and that we ought to recommend a change.
A little later, in paragraph 445, the Commission did recommend a change, and said this:
We have decided therefore that we ought to recommend that in future a depletion allowance should be given in respect of the cost of acquisition of mineral rights or areas.
The Commission limited that recommendation when it said:
It should be granted only in respect of sums paid after the date of the new system coming into force.
In other words, the prudent undertakings are once more cut out. For me, at least, a very large part of the force of that recommendation is extinguished by what the Royal Commission chose to say in the preceding paragraph. The argument against giving the depletion allowance to reserve land at present acquired is that the vendor may have received some element of tax-free sums in the amount which he received, and the Royal Commission have this to say about that point:
No doubt the disallowance "—
that is, of any charge for depletion in the purchaser's account—
is an element which has to be taken into account by any purchaser who is trying to fix a competitive price for an area; but to sup-pose that it s necessarily a determining element on each occasion or that it is even probable that conditions will exist under which the

tax difference will be reflected recognisably in the purchase price appears to us to sacrifice too much to dogma.
In other words, the Royal Commission said quite clearly that the tax element is normally entirely ignored at the time when the bargain was struck between the vendor and the purchaser.
I see two possible difficulties in the way of the acceptance of this Clause. First of all, there is the question of the administrative machinery which might be needed in order to give effect to this Clause and the basis upon which a depletion allowance could be arrived at. Machinery adequate for the purpose is already provided in the shape of the existing depletion allowance for subsequently acquired land in Part III of the Income Tax Act, 1952, where allowances are made on the basis of the ratio of the annual output to remaining reserves. A similar basis will be used in connection with reserve lands in hand.
The other objection may deal with the question of cost. I tabled a Question to my right hon. Friend the Chancellor in April this year asking what might be the cost of giving this depletion allowance, and the answer was that it was exceedingly difficult to determine what the cost of the concession might be. Quite clearly, it might be fairly substantial, but the extractive industry in this country is a very large one, and since the cost might be considerable, it is possible that my hon. Friend who will reply will say that on this ground alone the concession cannot be considered in this year's Budget.
At the same time, and even if he says that, this matter is one of very considerable importance to a very large industry in this country, and I hope that when my hon. Friend comes to reply, he will at least give a very clear indication of the attitude of the Chancellor in this matter. A year ago, we had from his predecessor some kind of intimation that the Government would again examine the problem. I hope that, if that is the kind of reply which he is to give on this occasion, which I can quite understand, he will at any rate be more definite and more forthcoming than on the last occasion.

7.15 p.m.

Mr. John Arbuthnot: I beg to second the Motion.
There is not very much I can add to the very adequate way in which my hon.


Friend the Member for Langstone (Mr. Stevens) has explained the purpose behind the Clause and the problem involved in it. Here we have an extremely important industry to the country, and it was rather disturbing to hear the answer of my right hon. Friend the Chancellor of the Exchequer that he did not know what the cost of a concession of this kind would be. That really is rather unsettling for the industry. If the Chancellor himself does not know what the cost of such a Clause may be, it is rather difficult for the industry to decide what probability there is of such a Clause being accepted, either now or at some future date. I hope it will be possible to have a clarification of the position in reply to this debate.
It seems unreasonable that there should be one part of the industry—the larger part—which has its reserves in hand, so to speak, which receives no allowance, and yet the smaller part of the industry, which has not been so wise in obtaining reserves in hand, receives an allowance. It is taxation of a profit that is in fact an unreal one. I hope it will be possible to do something to meet the problems of this industry, which is so important to the nation.

Sir T. Moore: I wish to support the Clause so admirably and lucidly sponsored and explained by my hon. Friend the Member for Langstone (Mr. Stevens). In doing so, I shall follow the time-honoured formula and declare my interest. I am closely associated with a company which has, for 140 years, been supplying bricks for the homes, factories, schools and hospitals and even the prisons of this country, and very good bricks they were and are, in spite of the destruction caused by Hitler's bombs to houses erected with them.
In order to do all this, as my hon. Friend has explained, the undertakings that are concerned in this industry had to acquire quarry land all over the country and erect very expensive and intricate machinery and buildings in order to turn the raw materials into bricks. These quarries get worked out in time, and the very expensive and intricate machinery is of no further use in the locality in which it is erected.

Mr. Emrys Hughes: Are there quarries in Scotland?

Sir T. Moore: Yes, one of them is, but if the hon. Gentleman wants any further information, perhaps he will see me outside, because I do not want to detain the House by answering somewhat irrelevant questions.
These quarries get worked out in time, but the machinery is of no further use in the locality of the quarry. Under the existing legislation, there is no depletion allowance for the working-out process of a quarry. I know that my right hon. Friend the Economic Secretary to the Treasury will probably argue that those who acquired this quarry land were fully aware of the fact that there was no depletion allowance, and yet they took the risk, and that is quite true. They did, but it was in the national interest that they should do so, and the nation has benefited as a result. They not only had to acquire land but to acquire such land as would supply reserves to justify the erection of expensive and intricate machinery.
The anomaly of which we complain has already been considered by the Tucker Committee. Although that Committee agreed that a depletion allowance should be granted so as to allow a proper appreciation of profits to be made, it did not feel able to go further than to refer the matter to the Royal Commission. The Royal Commission was a great disappointment in its recommendations on this matter. Although it in turn recommended that a depletion allowance should be granted, it limited it to new entrants to the industry.
To my mind, that was a great injustice, because the old members of the extractive industries had taken a risk, devoted time and money to research—chemical research—and every kind of development, and are to have no depletion allowance, but the new entrants profiting by the skill, enthusiasm and determination given to the industry by the older members are to be able to step in and get the depletion allowance, if the recommendation of the Royal Commission is adopted.
I do not know what any other hon. Member may say, but I think that between us we have proved the case, which is incontrovertible. I agree that possibly the Treasury might find it difficult to grant this request on this occasion as a certain amount of legislation would be inevitable, but the Treasury could give


us hope that next year, when, no doubt, we shall be in a much more favourable financial position than we are in today— [HON. MEMBERS: "Oh."]—we shall have the good will of the Treasury in this matter.
When this question was discussed last year a very convincing speech was made by my hon. Friend the Member for Essex, South-East (Mr. Braine). To such an extent was that speech convincing that the then Economic Secretary practically gave an undertaking—I shall not say that he went quite so far as to give an undertaking—that the whole matter was being very carefully and fully considered and that something would possibly be done. In view of that partial guarantee that something would be done, we ask that something shall be done now, or if not now, next year.

Mr. Birch: My hon. Friend the Member for Langstone (Mr. Stevens) moved the Motion for his new Clause with great lucidity. In support, he quoted a great many of the things which were said about depletion allowances in the Report of the Royal Commission. My hon. Friend the Member for Ayr (Sir T. Moore) pointed out in his reference to the Royal Commission that its recommendation extended only to new works. This Clause, as my hon. Friend is aware, goes considerably further than the recommendations of the Royal Commission, in that it would mean that expenditure incurred since 6th April, 1946, would qualify in full for allowances to be given in future.
My hon. Friend who is now the Parliamentary Secretary to the Ministry of Education spoke for the Government on this subject last time and gave a promise that the matter would be carefully considered. I do not think he went very much further than that. It has been extremely carefully considered. To say that our minds are not closed on this matter yet is as far as I can go to satisfy my hon. Friends. My hon. Friend the Member for Langstone was certainly right in saying that adoption of the Clause would call for extremely complicated legislation. There are a number of different types of minerals involved. There would have to be all sorts of provisions as to sales between associates and so on, and it would work out as a very complicated piece of legislation.

Further, as I think was recognised, the circumstances of different extractive industries in this country are not the same and a tax relief which benefits one does not benefit another. For example, the Cornish tin industry—like the "foolish virgins" to which my hon. Friend the Member for Dover (Mr. Arbuthnot) referred—which has many good friends in the House, would not be benefited, because, in general, it works on the royalty principle. The principal industries which would be benefited at present are sand and gravel, ironstone, chalk and brick clay. I do not think it would be quite true to say that any of those industries was really subjected to the full blast of foreign competition; they are reasonably prosperous.
My hon. Friend the Member for Dover raised the question of cost. The reason it is so difficult to estimate what the cost would be is that at the moment I understand, as a result of the way the industry is set up, this provision would mostly benefit the sand and gravel industries; but if there were depletion allowances, there is no doubt that there would be changes in the structure and a lot more companies would qualify for this relief. It is not easy to say how many. Therefore, there would be a considerable contingent liability which we cannot altogether estimate. Certainly the points made by the Royal Commission on this matter are weighty, but they are also extremely complicated. We have not yet reached a firm conclusion on them and, as I said, all I can offer my hon. Friends is an open mind.

Mr. Douglas Jay: The Economic Secretary said that his mind is not yet closed, but can he answer this question? Is the position now that the Government have accepted the logic and principle of this argument, as did the Royal Commission, but that they feel the legislation would be too complicated and the administrative problems too difficult? Is that the position, or is the hon. Gentleman telling us that the Government have not yet accepted the principle of the argument?

Mr. Emrys Hughes: I find myself in some doubt as to whether or not I can support the hon. Member for Ayr (Sir T. Moore).

Sir T. Moore: It is the first time.

Mr. Hughes: It may be the first time, but I feel somewhat compassionate because he made a very interesting speech in which he put a case for consideration of a company operating, I understood, in Scotland. If it is likely to benefit any of my constituents, I should be only too pleased to support it, because he knows that when it comes to helping industry in Scotland we sometimes agree.
I was puzzled when the Minister referred to the "foolish virgins". What are they doing in this quarry? There has been such a degree of ambiguity in this debate that I am extremely doubtful as to whether when the hon. Member for Ayr goes into the Division Lobby I should accept him as my leader. All I wish to know—perhaps the hon. Member can tell me—is where this quarry is located, whether it is in South Ayrshire, Ayr Burghs or whatever other location, and what exactly would be the advantage which would accrue to my constituents. [An HON. MEMBER: "Ask the virgins."]

Mr. Stevens: In view of the undertaking I have extracted from my hon. Friend, that he will keep an open mind on the subject and not regard it as a closed book, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(EXEMPTION FROM INCOME TAX OF CERTAIN TRADING PROFITS OF ALLOTMENT AND GARDEN ASSOCIATIONS.)

Income tax shall not be chargeable on profits arising from mutual trading by allotment and garden associations registered under the Industrial and Provident Societies Acts, 1893 to 1954, when these associations do not distribute to members any profits arising from such transactions.—[Mr. T. Williams.]

Brought up, and read the First time.

7.30 p.m.

Mr. Thomas Williams: I beg to move, That the Clause be read a Second time.
This Clause deals with a rather small point compared with the subjects with which we have we have been dealing. I know that the National Allotments and Gardens Association has been in touch with the Treasury. It has felt, ever since 1933, when this tax was originally imposed upon Co-operative societies generally, that it was unable to discriminate between an ordinary Co-operative

society with a turnover of millions of pounds, and a tiny garden or allotment society whose turnover might be a few shillings or pounds.
The size of the revenue obtained by the Treasury is so small that the Financial Secretary does not know what it is, according to a reply that he gave to a Parliamentary Question which I asked. It was the old formula, of course, that the figures were not available to him. I do not know whether he has got the figures today, but if he has I hope that he will tell the House exactly how much revenue is collected from allotment and garden societies which are registered under the Industrial and Provident Societies Acts, 1893–1954. I should imagine that the sum is so infinitesimal as to be not worth collecting.
The Financial Secretary and all Chancellors since 1933 have excused themselves by saying that they cannot discriminate between an allotment and garden society and a huge Co-operative society with a turnover of many millions of pounds. Why they should think that this would be forming an unpleasant precedent I really cannot understand. After all, it is curious that if a garden or allotment society carrying on similar activities on behalf of its members, and only its members, and distributing no profits among its members at all, is not registered it is not taxed. It is only if the allotment society is registered under the Industrial and Provident Societies Acts that the Treasury demands—it must be its ounce of flesh, since it is not big enough to be called a pound of flesh.
Why do these allotment societies feel that this is an unnecessary imposition? First, the Ministry of Agriculture desires to encourage allotment holders to cultivate their plots. Local authorities like their tenants in council houses to cultivate their gardens. These people come together in a society which purchases seed potatoes, fertilisers, seeds, and other things wholesale, and retails to its members at a determined price, which leaves a very tiny margin in hand.
The societies have a use for that tiny margin. An allotment society may lease an area of land for twenty-five or fifty years. The allotment holder is charged his normal rent and the society has to maintain, perhaps, hedges and ditches and be responsible for work on and


around the land which has been leased for a period of years or, perhaps, bought outright. Therefore, a small margin is required, and this comes from the small profit which is made in buying wholesale and retailing to the societies' members as cheaply as possible.
I do not think that I am called upon to make a lengthy oration. It is not sufficient for the Financial Secretary to repeat what was said in a letter sent by one of his Departmental officials, namely, that this was debated in the House in 1933 and that there has not been a sufficient change between then and now for the Chancellor to change his mind. I would not expect Conservative Chancellors of the Exchequer to change their minds every quarter of a century, but, at least, I think that the Financial Secretary will have to find a far better excuse for rejecting this proposed new Clause than the one that has been made from time to time over the years.
I hope that the hon. Gentleman will have looked at this question and will have noted the trifle in terms of cash produced for the Treasury, will have noted how unnecessarily it disturbs allotment and garden societies, and will feel that it is not the sort of precedent of which he or the Chancellor may be afraid. I hope that he will release these societies who are registered and let them get on with the job which is well worth doing, without the embarrassment of bookkeeping and the problems created by the tax collector who collects a tax which is not really worth collecting.

Mr. A. J. Champion: We are, as my right hon. Friend the Member for Don Valley (Mr. T. William) has said, concerned with small groups of people who meet together for the purpose of furthering their work on gardens and allotments. They come together in order that they may purchase co-operatively seeds, fertilisers, garden requisites and the like. Their task is, indeed, very limited, but they carry out the very important function of fostering the domestic production of food.
The usefulness of these associations is, of course, recognised by the Minister of Agriculture. In his fertiliser schemes, which he presents to the House from time to time under the Act of 1952, he makes specific mention of these associations and tells us that subsidy can be claimed by

them on behalf of their members in certain circumstances, always provided that the associations are registered under the Industrial and Provident Societies Acts, 1893–1928, or have written rules governing their constitution and management.
It might be suggested that it would be advisable for these societies which get together for this purpose not to register under these Acts and thus avoid payment of Income Tax on their mutual trading activities. But the fact is that most of these associations have control of some land. They either lease or buy land in order to carry on their activities. They usually have their land under a lease agreement, and in order to have that, they are urged to register under the Acts which I have mentioned.
It is quite clear, as my hon. Friend has said, that these are not societies which distribute dividends in any way. Any slight profit which they make is devoted to the administrative costs of running their little associations or financing the replacement of stocks and the maintenance of the sheds and so on which are necessary to enable them to keep their small stocks of fertilisers and other materials. In addition, they have to look after the boundary hedges and ditches of the land which they lease.
This tax is only a deterrent and a nuisance to these associations. It does not bring anything worth while to the Treasury. Indeed, I very much doubt if the amounts which accrue to the Treasury as a result of this small tax will pay for the cost of collecting it. My right hon. Friend has already mentioned some of the figures. And they seem to me to support what I am saying about the value of this tax to the Treasury.
We know that this tax is levied under Section 444 of the Income Tax Act, 1952, which re-enacted a Section of the Act of 1933. That Section of the 1933 Act was, of course, aimed against any profits made by the Co-operative societies. I am not entering into any old controversy about whether it is right or wrong for the Cooperative societies to have been mulcted in Income Tax, but it seems that we are using a very big stick to lambast a very small group of people who are doing a task entirely different from that of the normal Co-operative society.
I appeal to the hon. Gentleman to accept this new Clause. It will not mean much to the Treasury, and it is, as I say, a source of annoyance and a deterrent to those people who come together to do a job in which they should be encouraged. Anyone who has seen the declining allotments on the edge of great towns will realise that we should do everything in our power to increase a useful activity which is being carried out by many decent citizens of this country.

Mr. Powell: This new Clause seeks to exempt from Income Tax profits arising from mutual trading by the associations of which the right hon. Gentleman the Member for Don Valley (Mr. T. Williams) and the hon. Gentleman the Member for Derbyshire, South-East (Mr. Champion) have spoken. It is probable that under the law as it stands at the moment profits arising from mutual trading are not liable to Income Tax. The point is that the net surpluses accumulated by the registered associations are not regarded by the Inland Revenue as profits arising from mutual trading, and so far the associations have not sought at law to controvert that interpretation.
The question is, therefore, not whether we should do what the new Clause suggests but whether we should provide that the surpluses of these associations should, whether they are profits arising from mutual trading or not, not be liable to Income Tax. The wider problem of the surpluses of registered societies, of which this Clause deals with a very small part, was considered at great length and with great care by the Royal Commission on the Taxation of Profits and Income which came to the definite conclusion that surpluses should be taxable.
Paragraph 593 of the final Report says:
Our proposal"—
the Commission was assuming at the moment that these surpluses are not taxable—
is that no surplus derived by a corporation from trading operations should be exempt from taxation as profits under Case I of Schedule D on the ground of mutuality.
I will not trouble the House with the long argument which brought the Royal Commission to the unanimous conclusion that these surpluses, of which the small

surpluses made by these association are a tiny example, should not be exempt from Income Tax. But that is one of the new factors which have arisen since 1933 and which the right hon. Gentleman the Member for Don Valley invited me to put before the House, and I think that there we should not depart in this respect either from the law as it is in practice established at the moment or from the recommendations of the Royal Commission.

Question put and negatived.

New Clause.—(EXEMPTION FOR CERTAIN CHARITABLE ORGANISATIONS.)

Charitable organisations set up for the sole purpose of giving annual treats, or trips or other help to retired aged people, incapacitated persons, or special treats for school children, where all officials are honorary, shall be exempt from income tax.—[Mr. McKay.]

Brought up, and read the First time.

7.45 p.m.

Mr. McKay: I beg to move, That the Clause be read a Second time.
In Northumberland, particularly in the mining villages, it is the custom to have organisations set up for the special purpose of helping old people at Christmas and also to give them a free treat in the summer time. There has been a general feeling in the county—and I think that the same applies to the whole of Durham and probably to nearly all of the mining areas—that there was no necessity for such organisations to take any action so far as the tax law was concerned.
They have gone on obtaining funds for these special purposes, never expecting that they might, in certain circumstances, have to pay Income Tax. Recently however, in one part of my constituency, where one of these organisations had been set up for the special purpose of giving treats to aged people and also for providing trips in the summer time for old people and school children, the Income Tax authorities found that there were times when it was getting interest on money deposited in the bank which had accumulated largely as a result of the miners in the villages having contributed regularly by means of a levy on their wages for these objects.
Naturally, the organisations which are arranging for these trips and treats deposit the money in the bank until the time arrives when these trips or special


treats take place, and the interest accumulates. In this case the Income Tax authorities went back six years and are taxing this small village organisation £22. The whole of the money had been obtained in the way that 1 have described. There is no doubt that the whole of the work has been on a voluntary basis, that the money has been voluntarily contributed, and that the objects are entirely charitable.
It appears, from what I have been told by Income Tax officers, that the reason the organisation was taxed was that it had no rules and regulations and had not been registered, and on those grounds it was not exempt from tax. The Income Tax authorities are apparently pressing the fight and insisting that the £22 must he paid. It may be said in reply that there is no doubt that if the organisation had taken the necessary trouble it would be recognised as a charitable organisation and be free from tax. The whole point is that, to keep within the regulations, as I understand it, the organisation has to be registered, proper rules have to be drawn up, trustees must be appointed and a certain rigmarole has to be gone through.
People concerned in these local charitable organisations are not considering the law. They know what they are doing, which is simply trying to help old people and young children, and no one dreams that there is any possibility that, because people are putting a little money aside pending the arrival of the date for the various treats, the money will accumulate interest and be liable to tax.
My object is to draw attention to this case and also, if possible, to have the position made more flexible, in the sense that there should not be imposed upon these little charitable organisations the necessity for drawing up regulations, being registered, appointing trustees and so on, all in legal fashion. There are hundreds of such organisations in Northumberland and Durham, and I have heard of very few which have gone through the process of registration. Many of them, quite probably, would be liable to tax if the whole thing were investigated. Yet such a consequence would be against the whole principle of the general law itself, which exempts charitable organisations from Income Tax.
I want the matter to be ventilated, and I want the Government to look at the matter with a view to making the requirements sufficiently elastic, so that, even when a little charitable organisation has not gone through all the legal processes, a liability to tax should not be imposed when the authorities are satisfied that, in reality, it is entirely a charitable organisation.

Mr. Norman Dodds: I beg to second the Motion.
Anyone who has heard the speech of my hon. Friend the member for Wallsend (Mr. McKay) must be rather puzzled and, if what he says is true, shocked that such a thing could occur. As my hon. Friend has indicated, there are men and women who want to help others less fortunate than themselves. Some of these people, out of their goodness of heart, are prepared to give up a great deal of time for that object, but the majority of them do not understand the law and cannot be bothered with trivialities of the sort described by my hon. Friend. It is to be expected in our present state of society that there must be rules and regulations, but there can be occasions when these things are carried too far.
I have known my hon. Friend long enough to realise when he has a good case and when he is deeply disturbed, as he is about this matter. If what he says is correct, this sort of thing may apply at any time to any similar organisation. Therefore, in seconding the Motion, "That the Clause be read a Second time," I ask the Government to give an explanation which will remove the doubts and fears of all who are concerned to see charitable work of this kind maintained and developed in our country.

Mr. Powell: The terms of the proposed new Clause cover many types of purpose, some of which, I am advised, might well be charitable and thus exempt from tax under the law as it stands, some of which certainly never have been held to be charitable and so exempt, and some of which have probably been held to be charitable until the famous decision known as Baddeley v. Commissioners of Inland Revenue about two years ago, the effect of which was to show that certain activities, including the promotion of moral, social and physical wellbeing and the provision of facilities for social and physical training and recreation,


were not, as they had hitherto been supposed to be, charitable.
Since that decision, a great deal of study has been devoted to putting the law regarding charities on a more definite and satisfactory basis. It is fully recognised by the Government that the situation could not possibly be left in the situation in which the Baddeley case left it. It is, however, a most complex and difficult subject which must be treated as a whole. I was able to tell the House two or three months ago that good progress was being made and, although I could not, and still cannot tonight, announce the Government's conclusions, the work is nearing completion.
I must, therefore, advise the House that, until we can deal with the problems of the definition of "charitable purpose" which draw with them the appropriate tax treatment as a whole, which we can do only in the light of the Baddeley decision and as a legislative act, it would be quite wrong to take particular aspects, however deserving—I have no dispute with the hon. Member for Wallsend (Mr. McKay) about that—

Mr. Dodds: Would the hon. Gentleman say that, in the meantime, until the matter is decided, the tax authorities will be asked to be very reasonable, particularly in the kind of case referred to by my hon. Friend the Member for Wallsend?

Mr. Powell: Of course, the tax authorities must administer the law as it is made known at the time, and there are very narrow limits within which they can and, indeed, ought to exercise discretion.
As I say, this is a subject which requires to be looked at and treated as a whole. I must, with some regret, advise the House that, until that is done, it would be wrong to take certain aspects of it, however meritorious, and deal with them in isolation.

Mr. H. Wilson: I am glad to hear the Financial Secretary address himself in that spirit to the purpose of the new Clause moved by my hon. Friends the Members for Wallsend (Mr. McKay) and Erith and Crayford (Mr. Dodds). Clearly, there is a very strong case for something to be done. It is quite undesirable, and

outside the intention of Parliament, and, I am sure, outside the desire of the Board of Inland Revenue, that cases of this kind should attract Income Tax. But, as the hon. Gentleman says, the Board of Inland Revenue has to administer the law as it understands the law to be. The only real substantial challenge on the point was settled in a way which, as he fairly says, leaves the law in a most unsatisfactory state. It is good to hear that the work is nearing completion and that something will, perhaps, be done certainly not later than the next Budget, whenever that may be.
I hope that my hon. Friend will meanwhile, if the Treasury is agreeable, seek the advice of the Treasury, which will, I know, be helpful on this point, to see how the liability under the law of the organisation to which he referred might be mitigated. We had a debate last year on the question of the taxation of small lotteries run for charitable purposes, of football pools for football club supporters' clubs, political bodies and, above all, church and educational bodies and charities. On that occasion, the Solicitor-General, if I remember rightly, was very helpful in saying that there was a way round liability for Income Tax. He was not sure whether it was his duty as Solicitor-General to advertise the fact in the House, but on that occasion he did tell us about it. I am sure that, if his speech—delivered, if I remember aright, on 10th July last year—is studied, the sponsors of this kind of organisation might find that it was possible to put themselves outside the tax jurisdiction.
In addition, as the House will be aware, very largely as a result of that debate last year, the Board of Inland Revenue has made new regulations bearing on the position of charitable and other small lotteries, football pools and so on. I have, in fact, drawn the attention of my hon. Friend the Member for Wallsend to the announcement made by the then Chancellor of the Exchequer on 14th December last year in a written answer to the hon. Member for Southampton. Test (Mr. J. Howard), pointing out that, by a rearrangement of some of these schemes, any taxable profit—it is rather silly, really, to call it taxable profit—any surplus which has possibly attracted tax could be reconstituted so as to form a donation.
8.0 p.m.
I am sure that if my hon. Friend and those who have inspired him to introduce the Clause were to seek the advice of the Treasury, they could probably be given advice about how to conduct their affairs in such a way as not to attract tax on something which, I am sure, the Chancellor does not to wish to attract tax, until the day, referred to by the Financial Secretary, when the Treasury is in a position to present new and more radical changes in the tax law. It would be wrong, I am sure my hon. Friend would agree, to try to prejudice the whole reconsideration of the law affecting charities on this one case. I hope, therefore, that my hon. Friends will accept the assurance which we have been given by the Financial Secretary.

Mr. McKay: I hope that the Financial Secretary will look into the case which I have mentioned, of which his Department has particulars, and I trust that he will have some influence in getting the demand withdrawn. In the circumstances, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(PROFITS TAX ON BUILDING SOCIETIES.)

(1) The profits tax chargeable on the profits arising in any chargeable accounting period beginning after the thirty-first day of March, nineteen hundred and fifty-seven, and ending after the passing of this Act from the business of a building society shall be computed after allowing the deduction of any dividends or interest payable by that society in respect of shares in or deposits with or loans to that society and after allowing the deduction of any income tax payable by that society in respect of those dividends or that interest by virtue of arrangements entered into under section four hundred and forty-five of the Income Tax Act, 1952.

(2) In the last foregoing subsection the expression "building society" means a society regulated by any of the Acts regulating building societies, or a society registered under the Industrial and Provident Societies Acts, 1893 to 1954, which carries on a business of such a nature that it could have been established under any of the Acts regulating building societies, and no other business.

(3) This section shall be construed as one with the enactments relating to the profits tax.

(4) Nothing in this section shall affect section forty-two of the Finance Act, 1947 (which limits the amount of the profits tax payable by a building society), or any enactment relating to income tax.—[Mr. H. Wilson.]

Broucht up, and read the First time.

Mr. H. Wilson: I beg to move, That the Clause be read a Second time.
The House will remember the very interesting debate we had in Committee on a new Clause sponsored by the hon. Member for Huddersfield, West (Mr. Wade). On that occasion, it became clear that not only the whole of the Liberal Party but the Labour Party and a substantial number of Conversatives opposite, were in favour of the principles enunciated by the hon. Member in support of the complete exemption from Profits Tax of building societies.
On that occasion, there was a very strong expression of opinion by hon. Members opposite. It was obvious that they were quite dissatisfied with the answer then given by the Financial Secretary, so much so that the debate continued for some time, as the Financial Secretary will remember—I do not think it was his happiest moment during these Finance Bill debates—and during that time one hon. Member after another on the benches opposite made it quite clear that the considered view of the Committee as a whole was in favour of the acceptance of the new Clause of the hon. Member for Huddersfield, West.
At that point, the Chancellor had to be sent for. With great speed, he seized himself of the feeling in the Committee and said that this matter would be further considered before the Report stage, which is where we find ourselves tonight. We had hoped that the Chancellor would have put down a new Clause as a result of that consideration, but fearing that it was just possible that he would not do so, both the hon. Member for Huddersfield, West and my hon. and right hon. Friends and myself put down separate new Clauses dealing with the question of the taxation of building societies.
Neither the new Clause of the hon. Member for Huddersfield, West—"Relief from profits tax for building societies"—nor our own Clause goes anything like as far as the hon. Member for Huddersfield, West proposed in Committee. No complete exemption is here proposed. We took account of the difficulties mentioned by the Chancellor in Committee, and particularly his references to the Royal Commission.
The reason given by the Financial Secretary for not accepting the new Clause during the Committee stage was


that the Treasury was currently considering all the recommendations in the Royal Commission's Final Report about the Profits Tax, which is a long and complicated subject, and that until that was done it was impossible to treat one small part of it, namely, that part relating to the Profits Tax on building societies.
As a number of us pointed out in Committee, however, the relevant paragraphs —paragraphs 576 and 577—of the Royal Commission Report made it clear that the Commission did not think that this all hung together with the consideration of the rest of the Profits Tax. The Royal Commission's main recommendations in the Majority Report on Profits Tax were in terms of merging the distributed and the undistributed Profits Tax rate into a sort of corporation Profits Tax or a single merged Profits Tax rate.
The Royal Commission made it clear in paragraph 577—it is right for me to quote it again—that it recommended
that only the retained profit should be taxed: at the flat rate if our proposals are accepted, or at the undistributed rate if profits tax continues in its present form.
Therefore, in the minds of the Royal Commission, it was quite unnecessary to take any particular line about the Profits Tax. The Commission still had a clear and definite recommendation in respect of building societies. That disposes of the argument, put forward on that occasion by the Financial Secretary, that this matter could not be dealt with out of turn.
Other arguments were put forward. I remember suggesting to the Committee that the Government had certainly taken out of their turn all the recommendations relating to Profits Tax on overseas trade corporations. Indeed, they have gone beyond the Royal Commission in relation to Profits Tax on such corporations. The Government have prejudiced their whole consideration of Profits Tax in that respect in their haste to introduce this, to our mind, risky and suspect change in our tax law on overseas trade.
Therefore, when it suits the Government to do so, they do not mind taking something out of its turn, even to the extent of going against the Royal Commission. When it does not suit them to do so, however, they say that they cannot possibly consider the recommenda-

tions of the Royal Commission because they have to consider the Profits Tax recommendations as a whole.
On that occasion in Committee, we were prepared to accept that the Chancellor was in some difficulty about the matter and could not accept the whole hog proposals of the hon. Member for Huddersfield, West. We were quite prepared that night to vote for the new Clause moved by the hon. Member, and I am sure he was prepared to vote for it too, and the whole of his party with him. Nevertheless, we accepted the assurance of the Chancellor that he would look at this matter again. He made it clear that he was not giving any pledge that legislation would be introduced on Report and that he was facing difficulties. We still had hopes that, pressed as he was by the arguments used on that occasion, he would be able to produce something new. He has not done so.
I can speak only for my right hon. and hon. Friends and myself. I cannot speak for the Liberal Party, but their thinking is probably similar to ours. In those circumstances, we were faced with two choices. One would have been to re-table the new Clause that the hon. Member had put down. We decided not to do so. What we ask for in our new Clause is much less thorough-going than was asked for by the hon. Member for Huddersfield, West. We are, in fact, embodying in the Clause the exact proposals of the Royal Commission on Profits Tax and Income Tax. The Royal Commission advised against exempting the whole lot from Profits Tax and said:
we recommend that only the retained profit should be taxed.
My hon. and learned Friend the Member for Kettering (Mr. Mitchison), who has had a great deal to do with the Clause, has gone to endless trouble to ensure not only that the Royal Commission's recommendations are fulfilled in our new Clause, but that all the complicated Income Tax arrangements which operate in the case of building societies were taken into account in the drafting of the Clause. I need not speak in detail on its effects. The Chancellor will, I am sure, agree that although he might have drafted it better himself, if he had had the will to do so, it fulfils the recommendation of the Royal Commission.
Having said that, I do not propose to repeat all the arguments that were deployed in Committee. On that occasion, in a fairly lengthy speech, the hon. Member for Huddersfield, West put the argument why building societies were justified in claiming special treatment. The gaps in his argument, in so far as there were any, were filled by the hon. Member for Wimbledon (Mr. Black), who dealt particularly with the point about the reserves, which we all felt was an important one.
I put other considerations of a rather broader and more philosophical character, particularly those relating to the fact that building society shares cannot be traded on the Stock Exchange, cannot be the subject of movement up and down in value, and cannot be the subject of capital gains. Therefore, by those very facts, not only do they represent a superior form of economic organisation, but also they do not involve all the very ticklish problems to which attention is drawn in the Royal Commission's Report on the subject of undistributed profits and the possibility of increases in the notional value of those profits.
It is not necessary to rehearse all these arguments tonight. We on this side of the House have shown a great moderation in not pressing once again the new Clause which we supported and would have been prepared to vote on in Committee. We have put the much more moderate proposal of this new Clause, which strictly represents the views of the Royal Commission. And since the Commission itself did not say that this was dependent on reconsideration of the whole Profits Tax problem, I do not see how in heaven's name the Financial Secretary or the Chancellor of the Exchequer can wriggle out of it on that argument.
We are disappointed that the right hon. Gentleman has not put an Amendment of his own on the Order Paper. It means either that he does not intend to do anything about this matter or that when he looked at our new Clause he decided that, however hard he worked on it, he could not produce a better draft to do what the whole House demands should be done. If the Chancellor accepts the new Clause and we all join in paying tribute to my hon. and learned Friend the Member for Kettering, the House will be satisfied, but I warn the right hon. Gentleman that our forbearance in Committee

is not likely to be repeated in the House tonight.

Mr. Nigel Fisher: In supporting the new Clause, I do not, like the right hon. Member for Huyton (Mr. H. Wilson), think it is necessary to argue the merits of the matter again, because I do not think that they are seriously contested even by the Treasury. I think that we are all on common ground on the merits of the argument. Building societies are not trade organisations, not profit-making organisations and, we think, should not be subject to Profits Tax at all. But if there is to be a Profits Tax it should be at least on the so-called profits and not on gross earnings, because money is the commodity in which a building society deals.
It is not goods. Its raw material is its money and without the money it derives from investors it could not advance money for house purchase, and it would have to close down its business altogether. That being so, I think that we are entitled to argue that no other company has to pay Profits Tax on its earnings without first being allowed to deduct the cost of its raw materials. Some hon. Members may think that building societies, because they have a special economic and social value to the nation, should have special treatment. I do not think that anybody would deny that, at least, they should receive equal treatment. That is all that we are asking for, and all that the right hon. Member for Huyton and the hon. Member for Huddersfield, West (Mr. Wade) have asked for in the new Clause.
In Committee, the Financial Secretary quoted paragraph 562 of the Royal Commission's Report and said that Profits Tax should apply to all profits without distinction between corporations. That may be very well. If so, that should be applied in the same way to all corporations, building societies included, and the cost of the raw materials in which they trade should be allowed as a deductable cost before Profits Tax is applied. In paragraph 577 of the Royal Commission's Report only the retained profits are recommended for taxation, and I should have thought that it only has to be stated to be accepted. The Commission goes on to say that it can find no principle to account for or to justify the basis of the tax as it now stands.
8.15 p.m.
Even the Financial Secretary said that the Government do not reject the recommendation of the Royal Commission in this respect. If he does not reject it, why does he not accept it? It seems to me that we are only playing with words. It does not seem to me a serious argument at all, if we accept that this change would not be inflationary. If it would have that effect, in view of the Chancellor's speeches in recent days I should be the last to press for the change, but no money will be distributed through accepting the Clause. There will be no increases in dividends and no rises in the capital value of shares. The only result will be increases in reserves, and those reserves will be invested in the gilt-edged market, which seriously needs support at present.
This Profits Tax on building societies is unjust, inappropriate and totally irrelevant to the circumstances of the societies. In Committee, I said that I would like something much more valid by way of argument than we had from the Financial Secretary on that occasion. I said that unless we heard that this matter would be dealt with seriously, if not this year, then definitely next year, I could not go into the Lobby in support of my right hon. Friend. That is still my position.
The Chancellor has not proposed a Government Clause, which we find very disappointing. We cannot leave it quite like that. We ought to have an assurance. That is the very minimum for which we could ask. We ought to have an assurance that my right hon. Friend is prepared to meet our arguments next year. If we are given that assurance, I am prepared to accept it, because I have a trusting disposition. I am not a rebel. I am a loyal supporter of my right hon. Friend and of the Government. I think that my right hon. Friend is a very good Chancellor, but there are limits.
I seriously ask that we should be given this assurance—and I am speaking of my hon. Friends. If we show loyalty and restraint on this occasion, which I have indicated and I am anxious to show if possible, we should have an assurance that we shall be rewarded next year by being given the substance of the demand that we make on this occasion. That is the only basis on which I can give my right hon. Friend the support that I owe to him and which I am anxious to give

to him personally and to the Financial Secretary.

Mr. Donald Wade: I dealt with this subject at some length in Committee on 2nd July and I do not propose to go over the ground again. It occurred to me that in asking permission to withdraw the Clause that I moved in Committee, I might have quoted at my own expense a line of Tennyson's in "The Revenge":
You fly them for a moment to fight with them again.
But I hoped that after some days of reflection on the part of the Chancellor we should reach the Report stage and find that there was no necessity to fight at all, because the right hon. Gentleman had accepted the contention put forward on all sides in Committee.
As the right hon. Member for Huyton (Mr. H. Wilson) pointed out, we are not asking for the full extent of the relief that was asked for in Committee. Hon. Members who are supporting the new Clause are asking for an alteration of the incidence of Profits Tax on building societies on the lines recommended by the Royal Commission. But I ought to put on record the fact that the building societies still consider that they are not appropriate bodies to be called upon to suffer Profits Tax at all. The reasons for that were fully explained in the debate in Committee.
When he was discussing the Clause which I moved in Committee, the Financial Secretary stated that, building societies were engaged in the business of lending money on mortgage. He appeared to me to put some emphasis on the word "business". That may have been somewhat misleading, although I feel sure that the Financial Secretary did not intend to create any misunderstanding. There is, of course, not a precise definition of the word "business". In its widest sense it can include any activity. One might properly refer to the business of selling Premium Bonds. Whether that is a successful business is a matter on which the opinion of hon. Members may differ, but no one has suggested that the promoters of Premium Bonds should be subjected to Profits Tax.
There are many different methods of encouraging savings, and building societies do so in two ways. First, they encourage people to save by putting their


money on deposit or on share account with a building society and, secondly, they facilitate home ownership by enabling the purchase price to be paid by instalments. The advantage of this latter form of investment to the economy was mentioned on more than one occasion by the present Prime Minister when he was Minister of Housing and Local Government.
I will make one quotation. On 7th May, 1954, in an address to the Building Societies Association, and after paying tribute to the societies, the right hon. Gentleman said:
The economists tell us that there are very sound reasons for encouraging and helping a man to own his own house because it is an excellent form of saving and induces a habit of thrift which is of the greatest value to the community
To dismiss this form of saving as a mere business is really not very helpful.
I also think it fair to point out that a building society is not really a profit making institution. Furthermore—and I hope that the Chancellor will bear this in mind—the building society is debarred from trading by the Building Societies Acts and, therefore, it does not come into quite the same category as some of those other special classes of corporations referred to by the Royal Commission.
However, I will not pursue that point further tonight. The practical question which we have to face today is how to check the inroad on reserves and the fall in the ratio of reserves to total assets which is, in a large measure, the consequence of the imposition of Profits Tax. This is a matter of urgency since, so I am informed, the building societies have put off taking the very unpleasant step of throwing the burden of this tax on to the borrowers and, as I understand, they cannot defer that indefinitely.
If the Government will not now relieve the building societies altogether from Profits Tax, it would certainly be an advance in the right direction if the method of assessment were altered on the lines of the Royal Commission recommendation. The case for that has been made out so overwhelmingly that it is not necessary for me to repeat it.
Before I sit down, may I draw the attention of the Chancellor to one or two points of substance which should be considered when deciding how this change should be brought about? First, I suggest that the date on which the new method

of assessment takes effect is a matter of some importance. Building societies terminate their financial year at different times. The chargeable accounting period, therefore, varies and to achieve justice as between one building society and another I suggest that the best method to adopt would be to fix a date, such as the date when this Act comes into force, after which the new method of assessment would apply. In making the change-over it would not create any great administrative difficulties to provide that there should be one chargeable accounting period up to the date of the Act coming into force and another for the period from that date up to the end of the building societies' financial year.
My second suggestion is that some consideration must be paid to the fact that there may be a few building societies which have not entered into an arrangement under Section 445 of the Income Tax Act, 1952. That point was taken into account in the wording of the proposed new Schedule in my name in page 2515 of the Notice Paper, dealing with the computation of Profits Tax payable by building societies, which, I think, will not be called, but to which I believe I may refer.
Thirdly, and this is most important in arriving at the net surplus, or what the Royal Commission called the "retained profit", there must be deducted not only the interest paid to the investors but also the tax on that interest which the building societies account for to the Inland Revenue. That point, I am glad to say, is covered both in this Clause and in my proposed Schedule.
To turn to the general principles, as I see them, in considering whether this reform should be introduced, and introduced without delay, there are really only two simple questions which one must ask. First, is the imposition of Profits Tax on building societies in its present form just, and secondly, would the removal of this tax have any inflationary effect? The answer to both those questions is, in my view, no.
There is only one other point which should be put. The building societies are not asking for any discrimination in their favour. They are only asking for the removal of a tax which is admitted on all sides to be discriminatory against them. Therefore, I hope that the


Chancellor will either accept this Clause or give a clear and definite assurance that the relief asked for will be granted at an early date.

Mr. Stevens: I have listened with the closest possible attention to the speeches of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), my hon. Friend the Member for Surbiton (Mr. Fisher), and the hon. Gentleman the Member for Huddersfield, West (Mr. Wade). I could not find fault with anything they said, but while they spoke as it seemed to me the truth and nothing but the truth, I do not think the House has had the whole truth.
I have enormous sympathy with what they said. Most of us would agree that Profits Tax is a shocking tax. I do not think it is quite as bad a tax as Purchase Tax, which is the worst tax that man ever conceived, but Profits Tax has had an unhappy history. It started as the National Defence Contribution, and the late Neville Chamberlain had to go into reverse quickly and produce another form of national defence contribution, which subsequently became the Profits Tax. We have not heard half enough tonight about the evils of Profits Tax; we have only heard one aspect.
8.30 p.m.
We have heard about the evils of the two differential rates of Profits Tax, but nothing about the Sword of Damocles in the shape of non-distribution. [HON, MEMBERS: "It was out of order."] I should be out of order if I developed that theme, but I do not think I am out of order in drawing the attention of the House, when considering this one small point, to the fact that we shall be losing our sense of justice and perspective if we do not bear in mind the much wider scope of the tax as a whole.
Profits Tax is a thoroughly bad tax, and there is not the slightest doubt that it affects building societies adversely, but building societies are not alone, and I am puzzled why they should be singled out in this fashion. [An HON. MEMBER: "They do not make a profit."] Neither do nationalised industries, but they have not been singled out. I thought the right hon. Gentleman the Member for Huyton, who has no doubt read the Final Report of the Royal Commission on the Taxation

of Profits and Income, might challenge me on that and say that the Royal Commission recommended that public utility undertakings should be left as they were. However, what the right hon. Gentleman did not say, and what my right hon. Friend has not said, is that the Royal Commission recommended that industrial and provident societies should be treated exactly the same as building societies.
In paragraph 573 of its Final Report, the Commission said:
Our conclusion is that it would be right to treat the so-called dividend"—
that is, of industrial and provident societies, not building societies—
as interest and we recommend that if our proposal for a flat-rate tax is implemented only the retained balance of profit should be taxed.

Mr. Chapman: The hon. Member must not finish at that point. The paragraph ends by saying:
… but the existing special treatment of co-operative societies is not, so far as we know, a current subject of controversy and we think that the best practical course would be to leave their situation unaltered …

Mr. Stevens: I notice that the right hon. Gentleman the Member for Huyton was very careful to refrain from mentioning Co-operative societies. There was probably some special reason for that omission.

Mr. H. Wilson: The special reason was that it would have been out of order to talk about Co-operative societies on a Clause limited to building societies.

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray): We must keep discussion of the Clause as strictly as may be to the subject of building societies.

Mr. Stevens: I naturally accept your Ruling, Mr. Deputy-Speaker, but I was merely asking why building societies should be singled out for the special treatment, with which I entirely agree. I was suggesting that there are other organisations worthy of similar consideration.
Profits Tax is a thoroughly bad tax. My hon. Friend the Member for Surbiton was asking for more than he knew when, in the most menacing fashion, he looked at the Chancellor and said that as my right hon. Friend did not reject the advice of the Royal Commission he ought to accept it. In its three Reports, the Royal


Commission made about 200 or more recommendations, and if my right hon. Friend were to accept all that he did not reject, we should spend many weeks or months dealing with them. Interested though my hon. Friend is in these difficult and technical problems of administration and finance, he is asking too much of the House when he suggests that we should consider that kind of argument.
I entirely agree with the special pleading, but I suggest that it would be entirely wrong to take it out of its context as applied to the objections to Profits Tax as a whole. I go much further than did my hon. Friend the Member for Surbiton. He required an assurance from the Chancellor that something would be done about building societies and Profits Tax next year. I look for far more than that next year. I look for a recasting of Profits Tax as a whole, and I hope that we shall have some indication in that direction tonight, but I see no reason why that assurance should be limited to building societies.

Mr. Cyril W. Black: Is it my hon. Friend's case that the House should never seek to rectify any injustice unless at the same time it can rectify every other injustice?

Mr. Stevens: That is not my case. My case is that if by rectifying one injustice we raise many more, then we are an unwise House of Commons.

The Chancellor of the Exchequer (Mr. Peter Thorneycroft): At least upon the narrower issue of the Clause I detect a good deal of unanimity in the House. To start with, I would say that no one can criticise the drafting of the Clause; indeed, it has met with very favourable comment wherever it has been studied. The second thing I would say about it is that it is much narrower than the proposal which we were discussing in Committee, which was really for all-out exemption. I do not think that that could be accepted at any time, or in any foreseeable circumstances.
This is a narrower proposal, based upon one of the many recommendations of the Royal Commission. My hon. Friend the Member for Langstone (Mr. Stevens) is quite right in saying that there were many proposals of the Royal Commission dealing with Profits Tax.

Since the Committee stage, I have again studied not only the recommendations of the Royal Commission but the somewhat tangled history, which other hon. Members have described, of the imposition of Profits Tax and the way in which it came to be levied upon building societies.
I say at once that I have some sympathy with the case put forward. There is some force in it. But it does not stand alone in the recommendations concerning Profits Tax. I am not saying that we must do everything at once; we cannot deal with all the forms of Profits Tax at once; but this proposal is undoubtedly linked up with many others. Let us leave aside for a moment the major recommendation of the Commission about assimilating the two rates of tax so that that question will not be introduced into our controversy. It raises major issues with which we are not concerned now.
Nevertheless, there are many other recommendations about Profits Tax. There are proposals dealing with the way in which profits should be computed in the case of Co-operative societies or nationalised industries, and I certainly think that those cases should be considered at the same time as that of building societies. Whether or not they are linked with the wider question of the assimilation of the two rates of tax does not seem to me particularly to matter for this purpose. If we are laying down in a Finance Bill the way in which we should deal with profits of building societies, I think that we should also lay down the way in which we should deal with the profits of Co-operative societies and nationalised industries, upon which certain recommendations were also made.
Nevertheless, as I say, I have some sympathy with the point of view put forward. I have read the speeches made in Committee and I have listened to many arguments—mainly upon the same theme. What I would say to my hon. Friend the Member for Surbiton (Mr. Fisher) is that I shall certainly study the various proposals, covering a rather wider section than merely building societies, during the coming year. I shall study them with the intention of trying to produce comprehensive proposals for dealing with various bodies which are facing this kind of problem. I think that that will be a


fairer and more convenient way of dealing with the problem than simply by taking the building societies, however good their case may be, out of their context, and not dealing with the organisations with which they are linked.

Mr. Glenvil Hall: I have listened with the utmost care to what the Chancellor has said. I am not surprised at what he said; it was the sort of reply that I expected to receive from him. But the House should let him know that it is deeply shocked and disappointed at the tone that he has taken and the arguments that he has used. When the matter was discussed in Committee there was an overwhelming expression of opinion on the part of hon. Members on both sides that the Chancellor should do something in respect of the Profits Tax levied on building societies.
We were told, either by the Economic Secretary or the Financial Secretary, that the Chancellor would examine the arguments put forward in the debate, and the arguments that have been put forward by hon. Members on both sides were absolutely overwhelming in favour of something being done this year. Yet all that has rolled off the Chancellor as though nothing had ever been said, and as though the Financial Secretary or the Economic Secretary, whichever was the mouthpiece of the Chancellor, did not give an undertaking that he would examine the matter with an open mind, and also consider all the arguments that have been used.
The gilt-edged market is in a very peculiar position. A large number of organisations, including building societies, are extremely worried. One of the things troubling the building societies is that they must invest their surplus funds in trustee securities which, to a large extent, means that they have to put them into gilt-edged securities, and the margin is not enough. In addition to the fact that their reserves cannot be built up, they have the absolute knowledge that those reserves are sinking in value owing to the action of the Government. Yet, the Government having done that to the building societies, the Chancellor, after promising to look at this matter in a proper way, has given us this answer tonight.
I hope that my hon. Friends will carry this matter to a Division. We gave way

last time because we hoped that something would be done. I hope that we shall not make the same mistake tonight.

Mr. Chapman: I am surprised at the "scuttle" of hon. Members opposite. During the Committee stage the Financial Secretary said precisely what the Chancellor has said tonight. On that occasion hon. Members opposite made most vitriolic speeches in which they stated why they could not accept what the Financial Secretary had said. Then the Financial Secretary said that it was not possible to deal with this matter outside a general adjustment of Profits Tax and hon. Members opposite got up one after another to protest.
We on this side of the House felt that we had some allies in righteousness among them. Now, after all that, and after listening to precisely the same case from the Chancellor, they are, I understand, prepared to troop meekly into the Lobby to support the Government.
Do we recall what was said by the hon. Member for Surbiton (Mr. Fisher) on 2nd July? He has run away tonight faster than all the rest—

Mr. Ellis Smith: Do not upset him.

Mr. Chapman: But we could see this coming. I bow to the superior knowledge of my hon. Friend about the procedure in this House, but we could see this thing coming a long way off.
On 2nd July, the hon. Member for Surbiton said:
I was very disappointed with that reply"—
that is, the reply the replica of which he has listened to tonight—
because I thought that the argument he used was frivolous and almost an insult to the intelligence of hon. Members …I do not think that I have ever heard from my hon. Friend, whose power in debate and whose high intellectual calibre I much respect, a weaker case in answer to a serious debate …"—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 968.]

Mr. Fisher: I have taken the precaution of noting the words I said on that occasion. I said that unless we could be given some indication—I chose my words with care, naturally—that this matter would be taken seriously, if not this year, definitely next year, I could not go into the Lobby with the Government. That is what I said. We have been given that assurance tonight, that my right hon. Friend will


look at the matter seriously next year. I know perfectly well that my right hon. Friend is a man of honour and integrity in these matters, as, indeed, were his predecessors. When we have had such assurances in the past, about Entertainments Duty and Profits Tax, and so on, they have always been implemented. The least one can do is to support one's right hon. Friends when one knows that they are men of honour and integrity.

Mr. Chapman: But that is not an answer to what the hon. Gentleman said in the earlier part of his speech on 2nd July, when commenting on precisely the same sort of speech as he has heard tonight. It may be that in the last half-dozen or so words, towards the end of what he was saying, he began to be afraid of his party Whips and his reputation with his party and decided to climb down a bit. But his first thoughts were good thoughts. He ran away towards the end of his speech on that occasion and he has run away again tonight. It is a most deplorable performance. We thought that we had some allies on the other side of the House—

Mr. Ede: And it was only a fortnight ago.

Mr. Chapman: Yes, as my right hon. Friend says, it was only a fortnight ago. I have lost a great amount of the respect that I had for the hon. Gentleman—

Mr. S. Silverman: May I ask my hon. Friend a question? I understood the hon. Member for Surbiton (Mr. Fisher) to say —he said it before and he has said it again now—that he would be satisfied with a definite assurance that the Chancellor would put this matter right next year, and, therefore, he is satisfied tonight because he thinks that the Chancellor has given him that assurance. I do not think he did. I would like my hon. Friend to say whether he heard the Chancellor give a definite assurance.

8.45 p.m.

Mr. Chapman: I am sure that my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) is right. All that the Chancellor said is what he said in Committee, that he would look at the Profits Tax as a whole. He said he had sympathy, but he said that earlier. This was still the speech at which Government supporters had protested. It is now most disappointing to find them running away.
What was also really shocking was the speech made by the Financial Secretary to the Treasury in Committee. I would read what he said. In the light of what we had been talking about earlier it is most disappointing. He quoted with evident approval paragraph 562 of the Royal Commission's Report and he used this sentence:
The main principle that we wish to see adopted is that a tax on the profits of corporations should apply to all profits without distinction between corporations …
It is of the nature of equity in the imposition of taxation that these profits, this surplus, should be treated as liable to Profits Tax, like any other profits or surplus thrown up in the course of business.—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 960.]
This was after the Financial Secretary had spent days justifying a departure from that very principle in respect of overseas trading corporations. He told us that there was great merit in departing from the universality of Profits Tax for those corporations because of the good that they were doing abroad for Britain. When it came to building societies he turned tail, made a complete volte face and started enunciating the the principle that he had spent days denying.
Is it not a fact that, in the battle against inflation on the home front, building societies are doing, by their encouragement of small savings, as good a job for Britain as overseas trading corporations are doing abroad? I think that the hon. Member for Hastings (Mr. Cooper-Key) said, "Stuff and nonsense."

Mr. E. M. Cooper-Key: No.

Mr. Chapman: It sounded like it, but I beg the hon. Gentleman's pardon if I am wrong.

Mr. Cooper-Key: It was "drivel".

Mr. Chapman: Then the hon. Member for Hastings had better ask his hon. Friend the Financial Secretary whether the encouragement of small savings is a matter of drivel in the present inflationary situation. One of the best things we can have in this country is a further surge in private saving. The Chancellor knows it well, and I hope that he will now turn on his hon. Friend the Member for Hastings and tell him that he is talking drivel if he says the opposite.
The Financial Secretary is convicted from day to day of absolute inconsistency


in his arguments and in the principles he has put forward. His hon. Friends the Members for Surbiton and Holland with Boston (Sir H. Butcher) have now begun to run away, but I would remind them that it is as important to encourage small private savings as it is to encourage over-sea trading corporations.

Mr. H. Wilson: I hope that my hon. Friend the Member for Northfield (Mr. Chapman) will not misrepresent the Chancellor on this question of saving. Surely the whole point made by the Chancellor on television was that the Government had no responsibility at all for savings and that it was all a matter for the private citizen.

Mr. Chapman: My right hon. Friend is quite right. The performance which the Chancellor put up on television, in the manner of washing his hands of the whole situation, is very different from what he says in the House of Commons. Government Members are anxious to get away from responsibility at the moment, but I should think that the Chancellor would reach out gratefully for any straw which would help him to increase private savings.

Mr. Ellis Smith: On television, he was affected by the company he was in.

Mr. Chapman: My hon. Friend has the advantage of me; I do not know whose company he was in, but I will leave it at that.
We are due for an explanation from the Financial Secretary. He is a man who values his reputation in serious argument, and it is a shocking thing that he should have spent days leading us up the garden about overseas trade corporations and using the opposite argument with building societies. After what we have heard tonight, especially from hon. Members opposite, who have made tonight friendly speeches about the Chancellor, saying that he is a nice man, a man of integrity, and that all will come right next year, the building societies will be able to draw their own conclusions.
Hon. Members opposite had fire in their bellies only two weeks ago. Now, after the Chief Whip has been telling them about the situation of their own party in the country and the danger of

further splits, they are now running away from all that they said then. It is a shocking thing, and something of which they ought to be thoroughly ashamed.

Sir Herbert Butcher: We have seen the hon. Member for Northfield (Mr. Chapman) lashing himself into excitement and smacking the bench in front of him with his Order Paper, but it would have been worth while, before he devoted too much energy to the party line, to examine the position.
My right hon. Friend the Chancellor came to the House during the Committee stage of the Clause which had been put down by the hon. Member for Huddersfield, West (Mr. Wade), and gave a pledge that between Committe stage and Report he would most carefully examine it. He went out of his way to make it quite clear that there was no undertaking at all that he would do any more than examine it between Committee stage and Report stage. I must say that I was slightly disappointed with that reply. I had hoped that before Report, my right hon. Friend would have found himself able to table a Clause, but what has he done this evening? It is worth while realising how far the Chancellor has moved.
As I understand it, and I speak subject to correction if I am wrong, the Chancellor has suggested that, before he submits the next Budget, he will examine the Profits Tax position as a whole, without pledging himself to do anything. He has said he would specially examine the Profits Tax in relation to these special institutions, such as the nationalised industries, Cooperative and provident societies, municipal trading and building societies, with the intention of moving in the direction recommended by the Royal Commission. I say at once that I would have preferred him to have done it at this Report stage, but I am not prepared for the sake of twelve months between this Budget and the next to be found in the same Lobby as hon. Gentlemen opposite. It would be a poor—

Mr. Chapman: The hon. Gentleman was saying the opposite of that in Cornmittee. Has he not read his own words? He said:
It is not good enough for my hon. Friend to say that he is not prepared to deal with this small and minor point of the building


societies' liability to Profits Tax because the Chancellor is not in a position to deal with Profits Tax as a whole."—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 964.]
He is now turning round like all his hon. Friends and running away.

Sir H. Butcher: The hon. Gentleman is not chronologically accurate, because the intervention of the Financial Secretary had preceded the promise given by the Chancellor. I have already made it clear that I would have preferred to see the position of the building societies corrected in the 1957 Budget, but if it comes to a choice between the alternatives of joining hon. Members opposite in the Lobby tonight and waiting a year to secure the concession, the position of hon. Members on this side is transparently clear.

Mr. Wade: Did the hon. Member for Holland with Boston (Sir H. Butcher) understand the Chancellor to give a definite assurance that it would be dealt with next year? That seemed to be the implication of the remarks of the hon. Member. It would be enlightening if he would say that he understood the assurance to be a definite one to deal with it next year.

Sir H. Butcher: I should prefer the Chancellor to repeat the words he used because I have a feeling they were selected with care. My feeling is that the whole question of Profits Tax is to be examined, and, if it is not felt that the whole question of Profits Tax is to be reformed, there will be a special intention to deal with the various bodies which I enumerated earlier.

Mr. Glenvil Hall: What we really want is an assurance from the Chancellor that next year he will deal with this matter.

Mr. H. Wilson: I cannot make a second speech, of course, without the leave of the House, but perhaps I might have that leave for long enough to indicate the position of the Opposition in

regard to the withdrawal or otherwise of the Clause.

We cannot regard the reply of the Chancellor as in any way justifying the withdrawal of the Clause tonight. We have had his assurance as far as it goes. Frankly, it is not good enough, because the arguments have been fully deployed, and since they have been fully deployed and accepted by hon. Members in all parts of the House, we cannot regard the Chancellor's assurance as in any way satisfactory. No one in this House, with the possible exception of the hon. Member for Langstone (Mr. Stevens), accepts the argument of the Chancellor about the need to relate this to the whole of the Profits Tax. It may be of some help, of some comfort, to building societies to know that if the present Chancellor is still here—

Mr. S. Silverman: Which is doubtful.

Mr. Wilson: —which is extremely doubtful—he may feel moved to introduce some kind of relief. He has not even said he will accept this kind of relief, which in any case is only a halfway house, as we made plain.
We found last year when we pressed the previous Chancellor on a rather different matter that there was nothing more helpful in pushing him along in the direction in which he had half made a commitment than giving him the encouragement of having been made to vote in the Division Lobby. Therefore, we have no intention of withdrawing the proposed new Clause. We hope that enough hon. Members opposite will vote in accordance with their beliefs and their consciences in order to ensure that what they want to see will become the law of the land this year.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 197, Noes 250.

Division No. 166.]
AYES
[8.58 p.m.


Ainsley, J. W.
Blackburn, F.
Brockway, A. F.


Albu, A. H.
Blyton, W. R.
Brown, Rt. Hon. George (Belper)


Allaun, Frank (Salford, E.)
Boardman, H.
Brown, Thomas (Ince)


Allen, Scholefield (Crewe)
Bottomley, Rt. Hon. A. G.
Burke, W. A.


Awbery, S. S.
Bowden, H. W. (Leicester, S.W.)
Butler, Herbert (Hackney, C.)


Bacon, Miss Alice
Bowen, E. R. (Cardigan)
Butler, Mrs. Joyce (Wood Green)


Balfour, A.
Bowles, F. G.
Callaghan, L. J.


Benson, G.
Boyd, T. C.
Carmichael, J.


Beswick, Frank
Braddock, Mrs. Elizabeth
Castle, Mrs. B. A.




Champion, A. J.
Hynd, H. (Accrington)
Randall, H. E.


Chapman, W. D.
Irvine, A. J. (Edge Hill)
Rankin, John


Chetwynd, G. R.
Jay, Rt. Hon. D. P. T.
Redhead, E. C.


Coldrick, W.
Jeger, George (Goole)
Reeves, J.


Collick, P. H. (Birkenhead)
Jeger, Mrs. Lena (Holbn &amp; St.Pncs,S.)
Rhodes, H.


Craddock, George (Bradford, S.)
Johnson, James (Rugby)
Robens, Rt. Hon. A.


Cullen, Mrs. A.
Jones, David (The Hartlepools)
Roberts, Albert (Normanton)


Dalton, Rt. Hon. H.
Jones, Elwyn (W. Ham, S.)
Roberts, Goronwy (Caernarvon)


Darling, George (Hillsborough)
Jones, Jack (Rotherham)
Robinson, Kenneth (St. Pancras, N.)


Davies, Ernest (Enfield, E.)
Jones, J. Idwal (Wrexham)
Ross, William


Davies, Stephen (Merthyr)
Jones, T. W. (Merioneth)
Royle, C.


Deer, G.
Kenyon, C.
Short, E. W.


de Freitas, Geoffrey
Key, Rt. Hon. C. W.
Silverman, Sydney (Nelson)


Delargy, H. J.
King, Dr. H. M.
Skeffington, A. M.


Donnelly, D. L.
Lawson, G. M.
Slater, Mrs. H. (Stoke, N.)


Ede, Rt. Hon. J. C.
Lee, Frederick (Newton)
Slater, J. (Sedgefield)


Edelman, M.
Lee, Miss Jennie (Cannock)
Smith, Ellis (Stoke, S.)


Edwards, Rt. Hon. John (Brighouse)
Lever, Harold (Cheetham)
Sorensen, R. W.


Edwards, Rt. Hon. Ness (Caerphilly)
Lewis, Arthur
Soskice, Rt. Hon. Sir Frank


Edwards, Robert (Bilston)
Lipton, Marcus
Sparks, J. A.


Edwards, W. J. (Stepney)
Logan, D. G.
Steele, T.


Fernyhough, E.
Mabon, Dr. J. Dickson
Stewart, Michael (Fulham)


Fienburgh, W.
MacColl, J. E.
Stonehouse, John


Finch, H. J.
MacDermot, Niall
Stones, W. (Consett)


Forman, J. C.
McInnes, J.
Strachey, Rt. Hon. J.


Fraser, Thomas (Hamilton)
McKay, John (Wallsend)
Summerskill, Rt. Hon. E.


Gaitskell, Rt. Hon. H. T. N.
MacPherson, Malcolm (Stirling)
Sylvester, G. O.


George, Lady Megan Lloyd (Car'then)
Mallalieu, E. L. (Brigg)
Taylor, Bernard (Mansfield)


Gibson, C. W.
Mann, Mrs. Jean
Taylor, John (West Lothian)


Greenwood, Anthony
Mason, Roy
Thomas, Iorwerth (Rhondda, W.)


Grenfell, Rt. Hon. D. R.
Mellish, R. J.
Thornton, E.


Grey, C. F.
Messer, Sir F.
Tomney, F.


Griffiths, David (Rother Valley)
Mitchison, G. R.
Ungoed-Thomas, Sir Lynn


Griffiths, Rt. Hon, James (Llanelly)
Monslow, W.
Usborne, H. C.


Griffiths, William (Exchange)
Moody, A. S.
Viant, S. P.


Grimond, J.
Morris, Percy (Swansea, W.)
Wade, D. W.


Hale, Leslie
Mort, D. L.
Watkins, T. E.


Hall, Rt. Hn. Glenvil (Colne Valley)
Moyle, A.
Wells, Percy (Faversham)


Hamilton, W. W.
Mulley, F. W.
Wells, William (Waisall, N.)


Hannan, W.
Noel-Baker, Rt. Hon. P. (Derby, S.)
West, D. G.


Harrison, J. (Nottingham, N.)
Oliver, G. H.
Wheeldon, W. E.


Hayman, F. H.
Orbach, M.
White, Mrs. Eirene (E. Flint)


Healey, Denis
Oswald, T.
White, Henry (Derbyshire, N.E.)


Henderson, Rt. Hn. A. (Rwly Regis)
Owen, W. J.
Wilkins, W. A.


Herbison, Miss M.
Padley, W. E.
Willey, Frederick


Hobson, C. R. (Keighley)
Paling, Rt. Hon. W. (Dearne Valley)
Williams, David (Neath)



Paling, Will T. (Dewsbury)
Williams, Rev. Llywelyn (Ab'tillery)


Holman, P.
Palmer, A, M. F.
Williams, Rt. Hon. T. (Don Valley)


Holmes, Horace
Pannell, Charles (Leeds, W.)
WilHams, W. R. (Openshaw)


Holt, A. F.
Pargiter, G. A.
Willis, Eustace (Edinburgh, E.)


Houghton, Douglas
Paton, John
Wilson, Rt. Hon. Harold (Huyton)


Howell, Charles (Perry Barr)
Pentland, N.
Woodburn, Rt. Hon. A.


Hoy, J. H.
Plummer, Sir Leslie
Woof, R. E.


Hubbard, T. F.
Popplewell, E.
Yates, V. (Ladywood)


Hughes, Cledwyn (Anglesey)
Prentice, R. E.
Zilliacus, K.


Hughes, Emrys (S. Ayrshire)
Price, J. T. (Westhoughton)



Hughes, Hector (Aberdeen, N.)
Probert, A. R.
TELLERS FOR THE AYES:


Hunter, A. E.
Proctor, W. T.
Mr. Pearson and Mr. Simmons.




NOES


Agnew, Sir Peter
Bishop, F. P.
Craddock, Beresford (Spelthorne)


Amery, Julian (Preston, N.)
Body, R. F.
Crosthwaite-Eyre, Col. O. E.


Arbuthnot, John
Boothby, Sir Robert
Crowder, Petre (Ruislip—Northwood)


Armstrong, C. W.
Bossom, Sir Alfred
Cunningham, Knox


Ashton, H.
Braine, B. R.
Currie, G. B. H.


Atkins, H. E.
Braithwaite, Sir Albert (Harrow, W.)
Dance, J. C. G.


Baldock, Lt.-Cmdr. J. M.
Brooman-White, R. C.
Davidson, Viscountess


Baldwin, A. E.
Browne, J. Nixon (Craigton)
D'Avigdor-Goldsmid, Sir Henry


Balniel, Lord
Bullus, Wing Commander E. E.
Deedes, W. F.


Barber, Anthony
Butcher, Sir Herbert
Digby, Simon Wingfield


Barlow, Sir John
Butler, Rt.Hn. R.A.(Saffron Walden)
Donaldson, Cmdr. C. E. MoA.


Baxter, Sir Beverley
Carr, Robert
Doughty, C. J. A.


Beamish, Maj. Tufton
Cary, Sir Robert
du Cann, E. D. L.


Bell, Philip (Bolton, E.)
Chichester-Clark, R.
Dugdale, Rt. Hn. Sir T. (Richmond)


Bell, Ronald (Bucks, S.)
Clarke, Brig. Terence (Portsmth, W.)
Duncan, Capt. J. A. L.


Bennett, F. M. (Torquay)
Conant, Maj. Sir Roger
Duthie, W. S.


Bennett, Dr. Reginald
Cooke, Robert
Eden, J. B. (Bournemouth, West)


Bevins, J. R. (Toxteth)
Cooper, A. E.
Elliot, Rt. Hon. W. E. (Kelvingrove)


Bidgood, J. C.
Cooper-Key, E. M.
Elliott,R.W.(N'castle upon Tyne, N.)


Biggs-Davison, J. A.
Cordeaux, Lt.-Col. J. K.
Emmet, Hon. Mrs. Eve'yn


Birch, Rt. Hon. Nigel
Corfield, Capt. F. V.
Errington, Sir Eric







Erroll, F. J.
Jones, Rt. Hon. Aubrey (Hall Green)
Pitt, Miss E. M.


Fell, A.
Joseph, Sir Keith
Pott, H. P.


Fisher, Nigel
Keegan, D.
Powell, J. Enoch


Fletcher-Cooke, C.
Kerr, H. W.
Price, David (Eastleigh)


Fort, R.
Kershaw, J. A.
Price, Henry (Lewisham, W.)


Fraser, Sir Ian(M'cmbe &amp; Lonsdale)
Kimball, M.
Prior-Palmer, Brig. O. L.


Freeth, Denzil
Kirk, P. M.
Raikes, Sir Victor


Gammans, Lady
Lagden, G. W.
Ramsden, J. E.


Garner-Evans, E. H.
Lambert, Hon. G.
Rawlinson, Peter


George, J. C. (Pollok)
Lambton, Viscount
Redmayne, M.


Glover, D.
Lancaster, Col. C. G.
Remnant, Hon. P.


Glyn, Col. R.
Leather, E. H. C.
Renton, D. L. M.


Godber, J. B.
Leavey, J. A.
Rldsdale, J. E.


Gomme-Duncan, Col. Sir Alan
Leburn, W. G.
Robertson, Sir David


Goodhart, Philip
Legge-Bourke, Maj. E. A. H.
Robinson, Sir Roland (Blackpool, S.)


Gower, H. R.
Legh, Hon. Peter (Petersfield)
Rodgers, John (Sevenoaks)


Graham, Sir Fergus
Lindsay, Hon. James (Devon, N.)
Roper, Sir Harold


Grant, W. (Woodside)
Lindsay, Martin (Solihull)
Ropner, Col. Sir Leonard


Grant-Ferris, Wg Cdr. R. (Nantwich)
Linstead, Sir H. N.
Russell, R. S.


Green, A.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Schofield, Lt.-Col. W.


Gresham Cooke, R.
Longden, Gilbert
Scott-Miller, Cmdr. R.


Grimston, Sir Robert (Westbury)
Lucas, Sir Jocelyn (Portsmouth, S.)
Sharples, R. C.


Gurden, Harold
Lucas, P. B. (Brentford &amp; Chiswick)
Simon, J. E. S. (Middlesbrough, W.)


Hall, John (Wyoombe)
Lucas-Tooth, Sir Hugh
Smithers, Peter (Winchester)


Harris, Reader (Heston)
McAdden, S. J.
Smyth, Brig. Sir John (Norwood)


Harrison, Col. J. H. (Eye)
Macdonald, Sir Peter
Soames, Christopher


Harvey, Sir Arthur (Macclesfield)
Mackie, J. H, (Galloway)
Spearman, Sir Alexander


Head, Rt. Hon. A. H.
McLaughlin, Mrs. P.
Speir, R. M.


Heald, Rt. Hon. Sir Lionel
Maclay, Rt. Hon. John
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Heath, Rt. Hon. E. R. G.
Maclean, Fitzroy (Lancaster)
Stanley, Capt. Hon. Richard


Henderson, John (Cathcart)
McLean, Neil (Inverness)
Stevens, Geoffrey


Henderson-Stewart, Sir James
MacLeod, John (Ross &amp; Cromarty)
Steward, Harold (Stockport, S.)


Hesketh, R. F.
Macpherson, Niall (Dumfries)
Steward, Sir William (Woolwich, W.)


Hicks-Beach, Maj. W. W.
Maddan, Martin
Stoddart-Scott, Col. M.


Hill, Mrs. E. (Wythenshawe)
Maitland, Cdr. J. F. W. (Horncastle)
Storey, S.


Hill, John (S. Norfolk)
Maitland, Hon. Patrick (Lanark)
Studholme, Sir Henry


Hinchingbrooke, Viscount
Markham, Major Sir Frank
Taylor, Sir Charles (Eastbourne)


Hirst, Geoffrey
Marshall, Douglas
Taylor, William (Bradford, N.)



Mathew, R.
Temple, John M.


Hobson, John (Warwick &amp; Leam'gt'n)
Maude, Angus
Thomas, Leslie (Canterbury)


Holland-Martin, C. J.
Maudling, Rt. Hon. R.
Thomas, P. J. M. (Conway)


Hope, Lord John
Mawby, R. L.
Thompson, Kenneth (Walton)


Hornby, R. P.
Maydon, Lt.-Comdr. S. L. C.
Thompson, Lt.-Cdr.R.(Croydon, S.)


Hornsby-Smith, Miss M. P.
Milligan, Rt. Hon. W. R.
Thorneycroft, Rt. Hon. P.


Horobin, Sir Ian
Morrison, John (Salisbury)
Thornton-Kemsley, C. N.


Horsbrugh, Rt. Hon. Dame Florence
Mott-Radolyffe, Sir Charles
Tilney, John (Wavertree)


Howard, John (Test)
Nabarro, G. D. N.
Turner, H. F. L.


Hudson, W. R. A. (Hull, N.)
Nicholls, Harmar
Turton, Rt. Hon. R. H.


Hughes Hallett, Vice-Admiral J.
Nicholson, Godfrey (Farnham)
Vickers, Miss Joan


Hughes-Young, M. H. C.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Wakefield, Edward (Derbyshire, W.)


Hulbert, Sir Norman
Noble, Comdr. Rt. Hon. Allan
Wakefield, Sir Wavell (St, M'lebone)


Hurd, A. R.
Nugent, G. R. H.
Walker-Smith, Rt. Hon. Derek


Hutchison, Michael Clark (E'b'gh,S.)
Oakshott, H. D.
Wall, Major Patrick


Hutchison, Sir Ian Clark (E'b'gh, W.)
O'Neill, Hn. Phelim(Co. Antrim, N.)
Ward, Rt. Hon- G. R. (Worcester)


Hutchison, Sir James (Sootstoun)
Orr, Capt. L. P. S.
Ward, Dame Irene (Tynemouth)


Hyde, Montgomery
Orr-Ewing, Charles Ian (Hendon, N.)
Whitelaw, W. S.I.


Hylton-Foster, Rt. Hon. Sir Harry
Osborne, C.
Williams, R. Dudley (Exeter)


Iremonger, T. L.
Page, R. G.
Wills, G. (Bridgwater)


Irvine, Bryant Godman (Rye)
Pannell, N. A. (Kirkdale)
Woollam, John Victor


Jenkins, Robert (Dulwich)
Partridge, E.
Yates, William (The Wrekin)


Jennings, J. C. (Burton)
Peyton, J. W. W.



Jennings, Sir Roland (Hallam)
Pickthorn, K. W. M.
TELLERS FOR THE NOES:


Johnson, Dr. Donald (Carlisle)
Pilkington, Capt. R. A.
Mr. Bryan and Mr. Finlay.


Johnson, Eric (Blackley)
Pitman, I. J.

Clause 1.—(ENTERTAINMENTS DUTY.)

Mr. Deputy-Speaker: The next Amendment selected is that in page 1, line 22, in the name of the right hon. Member for Huyton (Mr. H. Wilson). It would be permissible and, I think, convenient to discuss at the same time the Amendment in the name of the hon. Member for Govan (Mr. Rankin), in page 1, line 23, at end insert:
(3) Entertainments duty shall not be chargeable during any calendar year commencing with the first day of January on payments for

admission to any cinematograph theatre in respect of which the Commissioners of Customs and Excise are satisfied that during the first twelve months of the preceding period of fifteen months the receipts in respect of payments for admission (excluding entertainments duty) have not exceeded the expenses of that cinematograph theatre.
but to have the vote only on the first Amendment.

Mr. Glenvil Hall: I notice, Mr. Deputy-Speaker, that you have not thought fit to call the new Clause standing in the name of my right hon. and


learned Friend the Member for Montgomery (Mr. C. Davies), myself and other hon. Members—"Reduction of sixty per cent. rate of purchase tax." It would be improper for me to ask you why, but as the Clause was tabled in order to elicit from the Government a statement about their intention with regard to the tax on musical instruments, I was wondering, as they have promised to look into it, whether you would give the Financial Secretary an opportunity now of letting us know the Government's position.

Mr. Deputy-Speaker: I cannot do that. The right hon. Gentleman said that he would be wrong to question the selection, and I should be equally wrong if I were to give a reply.

Mrs. Eirene White: I beg to move, in page 1, line 22, to leave out "eleven pence" and to insert:
the specified sum.
(3) For the purpose of the last foregoing subsection, the specified sum is—

(a) if the amount of the payment for admission, including the amount of the duty, is less than two shillings and nine pence, the sum of eleven pence; or
(b) if the amount of the payment for admission, including the amount of the duty, is two shillings and nine pence or more, the sum of one shilling".
In moving the Amendment in the name of my right hon. Friend the Member for Huyton (Mr. H. Wilson) and other hon. Members, I am glad, Mr. Deputy-Speaker, that you have suggested that we might discuss with it the following Amendment because, although they deal with slightly different points, they are both concerned with the state of the cinema industry and the effect of the Government's proposals.
When we discussed the Entertainments Duty during the Committee stage, we suggested that a much more generous remission might be made by the Government, and that they should omit the first shilling of all seat prices from the calculation of the duty. We made another suggestion, which is relevant to what we are about to discuss, that it would be a very good thing if they omitted altogether from their calculations for tax the new statutory levy. Both these suggestions were rejected. At that time, we were under some disadvantage because the House was not then in possession of the facts concerning

the statutory levy; these were laid before us only some time later, and, in fact, the Regulations made under the Cinematograph Films Act were passed by the House last week.
Now that we know what the combined effect of the levy and tax proposals is, we find—as I suggested to the Chancellor would be the case—that the result of taking the two things together is that, once again, there are considerable anomalies in the incidence of tax and levy combined. Largely for that reason, we are suggesting tonight that, in order to give at least some help where we think it most necessary, to an industry which is still very hard-pressed despite some tax remission, something should be done in regard to seats costing 2s. 9d. or more.
It might be asked, "Why take the seats at rather higher prices for the purpose of relief? Surely, if you are considering that sort of thing, the more natural course would be to ask for greater relief in respect of seats at lower prices". When one looks into the figures, one finds that, with the arrangements for the levy and tax combined, the lower-priced seats, in fact, now leave rather more in the pockets of the exhibitor than do the higher-priced seats. Taking the range from 2s. 9d. up to 3s. 6d., which is the range within which by far the greater number of cinema seats is sold in this country, we find that the exhibitor is only ¾d. per seat better off under the tax remission offered by the Government. In respect of the lower-priced seats, on the other hand, he has certain advantages, and the maximum advantage he gets per seat is 2¼d.
The exhibitor gets the advantage at various odd points on the scale. That is one of the troubles, because, since the Government were unable to accept our earlier suggestions, we now find these peculiar anomalies returning. On a 1s. seat, the exhibitor will be 1d. per seat better off. On a 1s. 3d. seat, he will be l¾d. better off. On a 1s. 4d. seat he will be l½d. better off, and on a 1s. 6d. seat he will be 2d. better off. Curiously enough, if he puts up his price by 1d. he may find that the net result is to make him slightly worse off than he would be if he did not put up the price at all. In the price range from 2s. 9d. upwards, the exhibitor feels that he has been treated badly, because his net gain is only ¾d. per seat. In the


range of prices somewhat higher, from 3s. 6d. upwards, he is only 1d. or 1¼d. better off.
We have had the very strongest representations from the exhibitors that, although the public believes them to be very much more prosperous owing to the remission of Entertainments Duty in the Budget, they will, in fact, be not much better off, partly because they have to pay extra levy and also because they have had to pay additional film hire. Also, like so many others, they have recently had to meet an extra wages burden, though that is incidental and we really cannot bring that into the argument.
9.15 p.m.
The net effect of having what the public believes to be a remission of £6½ million is that the exhibitor will benefit, so it is reckoned, by not more than £2¼ million altogether and that those who are selling the higher priced seats will benefit least. The great bulk of the business comes in the 2s. 9d.-3s. 6d. seats. That is why the exhibitors have asked us to concentrate on this group. When we asked for a larger remission at an earlier stage, the Chancellor resisted our request because, he said, it would cost the Revenue an additional £2 million, which he felt was excessive and, therefore, he could not accept our proposal.
I have asked the Cinematograph Exhibitors' Association what it calculates the cost of this proposal would be. I am told that the closest calculation it can make is that in a full year it would amount to about £680,000. In the current year, because the levy regulations do not take effect just yet, the net cost would be about £300,000. That is not a very large sum in an industry in which the general pressure of economic forces has been particularly hard in the last few years.
We believe that it is necessary to do something if we are to avoid large-scale closures of cinemas over the next few years. We hope very much that the way we propose tonight will commend itself to the Government as being an intelligent method of meeting a difficult situation. I shall not say anything on the second Amendment, on which my hon. Friend the Member for Govan (Mr. Rankin) would like to speak. Our main point is that once again we are suffering from anomalies as a result of the Government's policy. We believe that our suggestion

would do a great deal towards meeting those difficulties and we think that the amount for which we now ask is not excessive in the light of the conditions of the cinema industry, which is well known to hon. Members on both sides.

Mr. John Rankin: I beg to second the Amendment.
As my hon. Friend the Member for Flint, East (Mrs. White) said in so ably moving the Amendment, I want briefly to deal with the second Amendment, which appears in my name. I fully endorse all that my hon. Friend has said in advancing the claim for a more just distribution of the £6½ million which the Chancellor has given. Now that we see how the levy and the tax are working out, it has become perfectly clear, as my hon. Friend said, that those cinemas in which the gross admission price is 2s. 9d. upwards are being unfairly treated in relation to those cinemas in which the price is 2s. 8d. or less. We feel that with the co-operation of the Chancellor, which, we hope, will be forthcoming later in this debate, this discrepancy could be easily ironed out.
My Amendment deals with those cinemas which are not small cinemas or which are not operating in the marginal class, for we agree that both of these cases have been fairly treated by the President of the Board of Trade. But despite the promises that were clearly made in Committee, the type of cinema to which I referred, whore the access is just above the £150 mark, sometimes making a little profit and sometimes a loss, has been left completely out of the President's reckoning.
In Committee on the Cinematograph Films Bill [Lords] on 12th March, I moved an Amendment dealing specifically with this type of cinema and also including the small cinema and the marginal cinema. The Amendment asked that these cinemas should be exempt from liability to the levy.
In reply to the case that was then put up, the Parliamentary Secretary to the Board of Trade said:
I tried in my winding-up speech on the Second Reading to show that the Regulations would contain safeguards to cover excessive hardship for certain cinemas. The Amendment proposed by the hon Member for Govan would assist cinemas which are in difficulties, but we feel that it is inappropriate


for it to be written into the Bill because it is properly a matter for the Regulations.
That was one of the difficulties that faced us throughout the Committee stage of that Bill. We were repeatedly told by the Government Front Bench that this matter and the next matter would be dealt with in the regulations. To some extent we were working with the blinkers on. We had to wait until the regulations came along and with them would come the Kingdom of Heaven also for the cinema people.
The Parliamentary Secretary went on:
I give an assurance to the hon. Gentleman that we are now considering the exact form which any Regulations should take and that we have in mind a proposal somewhat similar to this Amendment. When it has been worked out we intend to submit it to the Cinematograph Films Council for its consideration and opinion. I stress that we have undertaken to submit draft Regulations to the Council for its advice before they are finally tabled for consideration by Parliament."—[OFFICIAL REPORT, Standing Committee B, 12th March, 1957; c. 80-1.]
There was an explicit promise that a regulation in keeping with the Amendment I had proposed would be tabled in due course after consultation with the Cinematograph Films Council.
It is opportune to ask the Financial Secretary to the Treasury whether or not any attempt was made to honour the promise that was given in Committee, because, when we considered the regulations, absolutely no regard whatsoever was paid to the promise that was made. The President of the Board of Trade had let us down.
It has been admitted time and time again, during the many debates that we have had on the cinema industry, that the levy and the tax are tied very closely together. That has not been denied. Now, despite the promise made to consider the exemption of this type of cinema from the operation of the levy, and the betrayal of that promise, nothing more can be done regarding the levy. However, we ask the Chancellor whether he will seek to honour the promise made by his colleague, the President of the Board of Trade, and relieve this type of cinema from the incidence of Entertainments Duty.
We are not asking for a great deal. There are not many cinemas which come into this category. I hope that the Chan-

cellor will agree that it is important from the point of view of the producer to keep as many cinemas open as possible. It is important from the point of view of the producer, the renter, the public, and also of the Chancellor that he should seek to build up the cinemas so that they may give him some income in the future rather than impose such burdens on them as may cause them to close, and so penalise not only the Chancellor but all those who derive a living and get enjoyment from films.
This is a reasonable plea to make. It gives the right hon. Gentleman the chance to honour a promise that has been broken by his colleague, and to do so at a very small price. I hope, therefore, that when he replies to the debate the right hon. Gentleman will say that he will accept this Amendment.

Mr. Geoffrey Hirst: I had a great deal to say on this subject at an earlier stage of these proceedings and I hesitate, therefore, to keep the House more than one minute tonight in supporting the suggestions made. At the same time, we should not be unmindful of what has been done by the Government on two occasions to help the cinema industry. We are sometimes inclined in our criticisms to overlook that, but we are grateful for the assistance given on two separate occasion in this respect. The trouble is that the amount, although helpful, has fallen somewhat short of the need, and it seems a pity to spoil the occasion for a ha'p'orth of tar, since it is not very much more that is being asked for tonight.
My right hon. and hon. Friends should not be altogether unmindful of the reasonable way in which the Opposition has put forward this Amendment. I am a relatively new Member, but some of us here have sat on the Opposition benches and made much stronger and more unrealistic requests than have been made on this occasion. I want to be fair, because I have myself done so, and therefore I respect the restraint of the Opposition in this matter. I shall not go into details. I have a good brief here, but I will spare my hon. Friends that because they know it all.
I hope that a little resilience will be produced, because there is no doubt that, although anomalies always arise, the anomaly to which the hon. Lady the


Member for Flint, East (Mrs. White) referred, though not a matter of life and death, was a substantial one. It must be wrong if we force people into a loss position which might well mean a business closing down through a type of taxation which hits them not on profits but on turnover. That point has been made many times, and it is a substantial one.

9.30 p.m.

Mr. Powell: The hon. Lady the Member for Flint, East (Mrs. White) admitted that the Amendment would give assistance to the larger cinemas on the whole and, on the whole, to the circuit rather than the individual cinemas.

Mrs. White: I said no such thing. I said that we were proposing to help with the rather more expensive seats, but there are many cinemas of modest size which are not circuit cinemas which have seats at 2s. 9d.

Mr. Powell: This proposal deals with seats at 2s. 9d. and above, and it remains a fact that the bulk of the assistance which the proposal would give would inevitably go to the larger and, on the whole, the circuit cinemas. I do not make that a case against the Amendment, but it is worth noticing.
The second point the hon. Lady made was that we were returning to the anomalies of the old scale of Entertainments Duty from which we had got away. Certainly it was one of the intentions of the reformation of the scale of Entertainments Duty in Clause 1 to remove the very large variation in the incidence of Entertainments Duty on differently priced seats. That has been done. The progression from the point at which Entertainments Duty becomes chargeable is now an absolutely steady and even progression.
When the hon. Lady quoted anomalies, they were variations in the amount of relief per seat and according to the price of the seat which is given by the Clause, but the anomalies are due to the removal of the variations in the existing scale and its replacement by a level, steadily graduated scale. They are anomalies of which we are getting rid, not anomalies which we are creating.
It is true that the form in which the levy is to be imposed falls with slightly more weight upon seats priced at 2s. 9d. and above, but that is no reason why a

further approximately £750,000 should be added to the total amount of remission of Entertainments Duty. The total amount of levy which will be obtained is that which was envisaged when my right hon. Friend came to his conclusion that £6½ million worth of Entertainments Duty was the appropriate amount of remission. There is no reason in the particular form of levy, which has been decided in consultation with the British Films Council and to which the House has agreed after debate, why we should alter the amount of the remission.
The hon. Member for Govan (Mr. Rankin) spoke of a more just distribution of the £6½ million as though it was that for which he was asking. In fact, he was asking for the £6½ million to be increased to £7¼ million and we had better get it into its right perspective. The relationship between the amount of the levy and the amount of the remission for the industry as a whole is not affected by the form of the levy. I do not believe that the form of the levy, which has been decided in consultation with the industry and by the House, will sensibly affect the benefit which the remission of duty will bring to the industry.
I must briefly mention the matters raised in the Amendment which is not directly before the House, but which the hon. Member for Govan touched upon. It would be quite out of the question to relate an indirect tax—and this is a tax upon admissions—to the state of profitability or otherwise of a particular undertaking. It would be rather like relating the levy of Purchase Tax to the question whether a particular wholesaler was or was not making a profit. If one is imposing an indirect tax, one cannot have regard to the trading position of the individual trader, and we are dealing here with an indirect and not a direct tax.
Putting that question entirely on one side, however, there is no necessary relationship between taxable capacity and the test envisaged in the hon. Member's Amendment. Many of these cinemas which individually, on his basis, do not make profits are members of groups which, taken as groups, may be making quite substantial profits and may be in quite a comfortable commercial position.

Mr. Rankin: Surely that is a general remark which applies to some of the cinemas whose position has already been


recognised by the Government—the marginal type—and dealt with during the course of the Bill. The argument applies to them as well.

Mr. Powell: It is quite true that there is built into the Entertainments Duty—irrationally, if one likes to say so—the rural areas exemption, but I believe that that exemption is valued by hon. Members on both sides of the House. It is admittedly a fiscal anomaly, but it was deliberately introduced for social reasons, to avoid certain results following in the rural areas. It in no way justifies us in picking out certain cinemas, not necessarily in rural areas, which upon a certain method of calculation may be making no profit, and waiving Entertainments Duty in their case.

Mr. Rankin: Accepting all that, why did the Parliamentary Secretary make a promise—presumably on behalf of the Government and his right hon. Friend—to deal with that type of cinema?

Mr. Powell: I am sorry; I am now dealing with Entertainments Duty. The hon. Member has had his opportunity to debate the question of the levy when it

was before the House. On his proposal, I would only say that if the estimate made by the industry itself, as to the scope of an Amendment of this sort, is correct, the cost would be approximately £7 million in a full year. In other words, it would mean doubling the remission which has been made by the Bill. It will therefore be seen that in any case it is quite out of the question within the scope of the proposals included in the Bill. Therefore, both upon the narrower matter which the hon. Lady's Amendment raises and upon the wider matters to which the hon. Member for Govan introduced us, I must advise the House not to accept the Amendment.

Mr. Rankin: In his reply the Financial Secretary stated that I had had the opportunity, during the proceedings on the Bill, to deal with the position—

Mr. Speaker: The hon. Member cannot make a second speech upon this matter except by leave of the House.

Question put, That "eleven pence" stand part of the Bill:—

The House divided: Ayes 244, Noes 192.

9.45 p.m.

Mr. Powell: I beg to move, in page 2, line 27, at the end to insert:
(7) The power conferred by subsection (1) of section two of the Finance (New Duties) Act, 1916, to make regulations for carrying the provisions of that Act as to entertainments duty into effect shall include power to make regulations for carrying into effect the provisions of this or any other Act as to the duty.
This is a very technical Amendment, which is designed to make it possible at a fairly early date to consolidate the law relating to Entertainments Duty. If this Amendment were not made it would be necessary in the consolidating Act to restrict the regulation-making power to the effect of the 1916 Act, but to exclude from it the effect of all subsequent Acts relating to Entertainments Duty. There is no practical effect other than to make it possible to avoid that absurdity in any future consolidating Measure.

Mrs. White: I do not propose to go into the technicalities of this Amendment. It is unfortunate that we should be preparing to consolidate an Entertainments Duty which has become exclusively a cinema tax and has very little basis in logic. It is because the duty is levied upon the purchaser of the ticket and not on the exhibitor in the cinema that we land ourselves in so many difficulties in one Finance Bill after another.
I cannot say that we welcome this provision, because I think that the time has come when, far from consolidating it, we ought to discuss the whole logical or illogical basis of it. As we do not know precisely what the Government have in mind for the future, and as they regard this as a necessary enabling step, I think that we have to accept it; but I think we should make our protest that the Government are not prepared to look very thoroughly into the whole basis of a tax which has become very anomalous in its operation.

Amendment agreed to.

Clause 11.—(INCREASE OF PERSONAL RELIEFS.)

Mr. H. Wilson: I beg to move, in page 7, line 31, to leave out from "income" to the end of line 35.
We are now, as we were during the Committee stage on 29th May, debating the concession being made to Surtax payers. On that occasion, considerable anxiety was expressed on this side of the House about the concession to Surtax payers, but the Chancellor, who, at that time, was rather more buoyant than he has appeared in recent speeches in the country, justified or tried to justify all that the Government were doing in the matter of Surtax by saying that it would enable us to have an increase in production.
The right hon. Gentleman referred to the capitalist system in the United States of America, and finally, as the crowning glory of his argument, said "After all, look at what they do in Russia," and concluded by saying:
If in Europe, in the United States of America and in Russia they are prepared to offer rewards to those who are doing the big jobs, we should be foolish, and, indeed, failing in our duty, if we did not move a little in the same direction.
I immediately followed the right hon. Gentleman, and I said:
Now we understand why Mr. Khrushchev, when he was here last year, said that if he lived in this country he would be a Conservative."—[OFFICIAL REPORT, 29th May, 1957; Vol. 570, c. 450.]
I see no reason to change the form of words which I used then because of anything that has taken place since.
I understand that the Chancellor is still in trouble with his Cabinet split about Post Office charges this evening, and we quite understand if it is not possible for him to be here for this discussion on Surtax, but if he had been here I am sure that he would realise that when he was saying that big rewards are given in the Soviet Union to some of the big executives he was wrong to say that they were allowed to keep a great deal more of their earnings than is the case in this country. He did not make sufficient allowance for the relative insecurity of employment in the top executive positions in the Soviet Union.
Nor do I think that the right hon. Gentleman has paid sufficient attention to another point to which we have drawn his attention, which is that in the Soviet Union they do not have the same tax provisions in respect of compensation for loss of office. [Interruption.] I think that we have got on very quickly with the Finance Bill today, possibly due to the fact that hon. Gentlemen who are now interrupting have not been with us for most of the time.
When we debated the question of the Surtax concession on the Finance Bill—properly speaking, they are actually changes in the earned income allowance to those who are in the Surtax range—we debated it rather more widely than is permitted by the Amendment. This Amendment is specifically related to that part of the concession which deals with

the one-ninth earned income allowance in incomes of over £4,000 per annum.
We made it clear during the Committee stage that we were prepared, as part of a just and balanced Budget, to see some change made in the earned income position of Surtax payers, and that we thought it was reasonable, as was suggested in the Second Report of the Royal Commission, that perhaps there might be a concession made up to about £2,500 a year.
We were, in fact, more reasonable than that. We recognised that under this Government there has been this continuing inflation since the Royal Commission made its Second Report in 1954, and, therefore, our Amendment was based on the figure of £2,500, scaled up to allow for changes in the cost of living. That was voted down and I would be out of order tonight to deal at any length with the two-ninths earned income concession. In regard to the range beyond that, again we were prepared to see the acceptance of the Royal Commission's recommendations of one-ninth for the next £500, but what the Chancellor has done is to give one-ninth on the next £2,000.
I do not want to repeat the arguments used in Committee. I do not think that is necessary. Most of the reasons given by the Chancellor in the Budget debate in April, and as recently at 29th May, have now been shown to be completely hollow. He said, for example, that the purpose of this concession was to discourage emigration of our best brains. I do not think it necessarily follows that the executives, scientists, designers, craftsmen and others, upon whom above all our scientific future depends, are in the Surtax ranges. They are much less likely to be found in the ranges of £4,000 to £10,000 upwards.
We have had no evidence from hon. Members, nor even noble Lords, opposite suggesting that that is the case. We are only too well aware that the greater part of the emigration of the people we can least afford to lose occurs among those who are below the Surtax ranges altogether, those earning between £600 or £700 up to £2,000, who are outside the scope of these earned income concessions. For that vast and important group, which includes particularly the more virile, many of whom are emigrating, this Bill


does nothing, except if the person in question has a child of more than 12 years of age. He then has a very small amount.
In Committee we had a very long and, many people thought, a rather inconclusive discussion on the relation of taxation to the amount of work done—incentives to production, and so on—and there was much bandying about of quotations from the Royal Commission's Report and, in particular, quotations from the Social Survey. In general, we took the view which prevailed with the Royal Commission. It could see no connection between the level of taxation and the amount of work done.
All of us agree that more work needs to be done. I for one have been deeply moved, and I am sure that hon. Members on this side have been moved, by the fact that the Chancellor, in the very grave speech that he made last Wednesday, when he opened a block of offices in the City, said that what we need is more work. I was interested to see that in his pronouncement to the National Production Advisory Council for Industry, on Friday, he said what troubled him was that we were being paid too much and that we wanted more work.
I was interested to find that the right hon. Gentleman said the same on television last night. This is interesting because, last year, we complained of industrial stagnation and said that it was the deliberate policy of the former Chancellor, who now, for some unaccountable reason, has become Prime Minister, which caused that stagnation. He said that expansion for production must be halted, that we were going too full out and efforts had to be retarded. Let us hear no more from the Government side of the House that people are not working hard enough, because, last year, it was the deliberate policy of the Government to ensure that they did not work hard enough.
I do not think there will be much room for a lot of debate tonight about the relation between incentive and the total volume of industrial production. It has now become quite clear that under this Government we get either stagnation in production or an inflationary boom that is completely outside the control of the Government, and there does not seem to be any middle position.
10.0 p.m.
That was not the only argument that we had about this Surtax position. I think we have been reasonably fair on this side of the House in suggesting that some improvement in the earned income position affecting the lower paid Surtax payers would not be unreasonable, provided it was part of a socially and economically just Budget. But this particular concession comes in a Budget where, as everyone knows, most of the concessions have been given either to the Surtax payers or to big industrial groups, particularly through the medium of the overseas trade corporations.
Time and time again in Committee and tonight the Government have said,"We cannot yield on this particular hardship case, on this fair proposal to relieve some taxpayers, because we have not got the money." Yet, they have given away in this field, covered largely by the Clause which we are now discussing, taxation amounting to £130 million in a full year. We warned the Government at the time of the Budget that they were going too far in this direction. We warned them that this would be regarded as highly provocative in the industrial sphere.
I do not think that anyone who really considered the repercussions of the Chancellor's action in the industrial sphere could have any doubt about what the reaction would be. The Chancellor nevertheless showed a total disregard of the economic and social consequences of his action as far as Surtax was concerned. That was in April. That was one of many reasons why in the Budget debate I described his Budget speech as an assignment with inflation.
I wonder how the Chancellor regards his Surtax concessions today. Does he not see any connection between his frivolous and irresponsible Budget and the very grave situation which he himself had to describe in those two speeches that he made last Wednesday and last Friday? I do not intend to follow him in those speeches tonight. I do not intend to deal in the slightest with the general inflationary situation, because we shall be having a full debate on the inflationary position, I hope, in the very near future.
By that time we hope that the Chancellor of the Exchequer will have got out of his hand-washing attitude. By that time we hope that he will have accepted


the responsibility of the Government for the inflationary position and will be able to announce real policies for dealing with the subject of inflation. I hope that we shall have constructive proposals put forward, although I should be very much out of order if I were to attempt to outline any of them this evening.
As to this Clause which we seek to amend, even in the conditions of April, when there were still many who thought that the danger facing this country was deflation rather than inflation, we thought that these proposals were irresponsible and inflationary, and if we thought so then—and I am sure that the whole House must now realise how right we were about it—how much more do we feel that this argument can be sustained tonight, in the middle of the present inflationary crisis? I know the Chancellor said last night that there was not a crisis, that exports and production were going up. The only trouble was this little matter of inflation, and nobody was to blame, least of all the Government, who merely held the ring and stood on one side.
The real truth about the Budget was, as many of us said within 24 hours of the Chancellor sitting down in the Budget debate, that he was not concerned with the economic or the social position of the country. It was a direct appeal to the wavering Tory abstainers who had let him down in a long succession of by-elections. That was why we said, as early as 10th April, that this was directed not towards the economic position of the country but to the wilds of Warwick and Leamington, the backwoods of Beckenham, and all those other places. [An
HON. MEMBER:"Hornsey."] Hornsey came a little later. The Government deferred the Hornsey by-election until after the Budget because they knew how popular the Budget would be, and they got their answer at Hornsey as they have had it in those other places.
Since then, the Chancellor has been driven to almost as many expedients in trying to justify his Budget as the Foreign Secretary was in trying to justify Suez a few months earlier, and with about the same degree of success. He said that it would stop emigration. We all know perfectly well that the Surtax payers with £4,000 a year or more are not the people who emigrate. Many of them are uncertain as to whether they would get as

much at that in the United States or, indeed, in the Soviet Union, or any of the other places to which the Chancellor was directing their attention. Many of them are able to get, in addition to their salaries, various perquisites and privileges of a kind which do not fall within the scope or even the attention of the Board of Inland Revenue. So that particular argument also falls to the ground.
It was not possible for us again this evening to raise the whole wide subject of Surtax or of earned income relief. It was not possible for us to move—and I am sure that it would not have been selected if we had—precisely the same Amendment as we moved in Committee. We have, therefore, confined our argument to the £4,000 to £10,000 range where as the Chancellor told us in his Budget broadcast, it was essential to give belated justice to the Surtax payer. It is three and a half months later now and there still has not been given belated justice to the old-age pensioners who have a much higher claim on any of the Chancellor's priorities at present. Indeed, since that time, and partly because of the Budget, the inflationary position has got a great deal worse and the position of the old-age pensioners has correspondingly deteriorated as a result. But I should be out of order in pursuing that point any further.
I think that we are entitled, even at this late stage in the Finance Bill—and this is no laughing matter, I assure hon. Members opposite—to suggest to the Chancellor that if he wants to make the sort of appeal to the country, which it will be very difficult for a Chancellor like him to make, but which he must make if this country is to solve its inflationary difficulties, then, as a first step, and only as a first step, he should accept this Amendment, cut down on the largesse to the higher paid Surtax payer and give his concessions to those in greatest need because of the Government's proposals, and then produce a thorough-going and comprehensive series of proposals for dealing with the economic problems facing the country, both at home and abroad.
It is because we regard this as one of the most provocative acts of the Budget, the one which has done a great deal of harm both to our social system and to the economy, that we have put down this Amendment tonight, and in the likely


event of the Government refusing to accept it we shall once again, with a much stronger case on our side as a result of the last three and a half months, go into the Division Lobby in favour of what we propose.

Mr. Birch: The right hon. Member for Huyton (Mr. H. Wilson) introduced some larger economic issues in his speech, which he rightly says will shortly be debated by the House, and I shall not, therefore, deal with them. The arguments on both sides about earned income reliefs have already been fully deployed in the Budget debate, in the debate on Second Reading, and in debate during the Committee stage, so it is rather "cold mutton" to have it at this time.
The right hon. Gentleman was, I thought, a little unfair in attempting to knock down my right hon. Friend the Chancellor by saying that his comparison with Russia was not correct, on the ground that the Russians had no security of office or no compensation for loss of office. That is not quite true, I think. After all, Mr. Malenkov has been made manager of a most important plant at Ust-Kamenogorsk, which, I suppose, is Russian equivalent of a peerage and a seat on a gas board. It is not fair to say that there is no compensation at all for loss of office in Russia. It is true, as my right hon. Friend said, that we are, on the whole, at the bottom of the league compared with most countries in the sense that our taxation is a great deal higher than most others, and still very high indeed by any standards.
Many different views have been expressed by hon. and right hon. Gentlement opposite in the course of debate about how high the level of earned income relief ought to go. During the debate on the Second Reading of the Finance Bill there was a sort of Dutch auction among them, during which they all suggested different sums. Now, on this Amendment, which takes up what was, I think, a Liberal Amendment which was not called, we are denounced once again for having done what we believe to be right from the point of view of stimulating production—I emphasise it again—and right from the point of view of keeping the ablest men in the country. If I may say so, it is a little tough to be denounced in quite these terms when

we remember that the hon. and learned Member for Kettering (Mr. Mitchison) argued that earned income relief should run without limit for those under Schedule E or opting to be under Schedule E. When we refused to accept his Amendment, he denounced the whole proposition with almost maenad frenzy; so that the conflict of views among right hon. Gentlemen opposite seems to be a little odd.
On the question of whether or not this is an inflationary Budget, it is right to remind hon. Members that we have had Amendments which would have cost hundreds of millions of pounds. We have resisted them. This Budget provides a larger surplus than the one before, and it is not, in fact, an inflationary Budget. If we accepted the Amendment it would save only £4½ million, and that must be put against the hundreds of millions which hon. and right hon. Gentlemen opposite have suggested we should remit in taxation. These are not, I should have thought, very deflationary proposals.

Mr. H. Wilson: I wonder whether the right hon. Gentleman would elucidate that point. When he said that this Budget provided for a bigger surplus than last year's Budget, what does he mean by that? Is it not a fact that the Chancellor's Budget provides for a £560 million surplus, and did not his predecessor also budget for exactly a £560 million surplus? Is not the only difference between them that his predecessor was out in his calculations by about £300 million, and what guarantee have we that this Chancellor equally is not out by £300 million?

Mr. Birch: We must wait for the event for that. All I am saying is that we have discussed this matter up hill and down dale. There is nothing new to be said. We believe that the line we have adopted is right. We consider that the line proposed in this Amendment and in related Amendments to extend the concessions still further is wrong, and we stand pat where we are.

10.15 p.m.

Mr. Deputy-Speaker (Sir Gordon Touche): The Question is,"That the words proposed to be left out stand part of the Bill."

Mr. Jay: I do not know whether the Economic Secretary has nothing more to say in defence of the Budget than we have just heard from him.

Mr. Gerald Nabarro: On a point of order. Is it in order for the debate, to continue after the Question has been put?

Mr. Deputy-Speaker: I had not collected the voices.

Mr. Jay: I was merely asking the Economic Secretary whether he really finds it impossible to give any better reply than that which we have heard so far. He defended the Russian social system and drew a bit closer together the link between the Tory party and Mr. Khrushchev, but he gave no answer to the arguments of my right hon. Friend the Member for Huyton (Mr. H. Wilson).
I ask the Treasury Ministers in all seriousness—and we would like to ask the Chancellor this if he were here—whether the Chancellor is really sure that he was so wise to give away this extra purchasing power in his Budget in April. The Economic Secretary says that there is nothing further to discuss, but does he not think that the experience of the intervening economic debates since April may throw at least some doubt on the wisdom of the Chancellor's decisions in his Budget? Does he think that we can draw no lesson from the inflationary consequences which that Budget has had?
After all, the Chancellor relieved taxation by £130 million in a full year. Although we were prepared to agree that some reliefs were wise, we did not believe that the Chancellor was right to go so far as to add this extra £130 million of tax relief on top of the other reliefs which he had given. The Chancellor himself said, in his Budget speech:
I reject unequivocally the view that the sole duty of a Chancellor is to remove taxation at whatever risk to the economy …Actions of that character might conceivably buy from the undiscerning a momentary popularity. It would be short lived."—[OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 987.]
I suggest to the Economic Secretary that the popularity of the Budget, if ever there was any, has been extremely short lived. The country today is coming to see that it was an obviously inflationary Budget. It has contributed to the existing situation—

Viscount Hinchingbrooke: How?

Mr. Jay: —which the Chancellor himself has been lamenting. The noble Lord asks "How?" It has done so in precisely the way that we warned the Chancellor it would at the time of his Budget speech.

Viscount Hinchingbrooke: The right hon. Gentleman is arguing on a point of Surtax. The law is not yet made. No Surtax concessions have yet been given. Even if they had been, they would not operate for another year. How can they have an effect on inflation?

Mr. Jay: The noble Lord knows perfectly well that as soon as the concessions are granted in the law Surtax payers spend more freely. [HON. MEMBERS: "Oh."] Of course they do.

Mr. Nabarro: Surely, the right hon. Gentleman is forgetting that those same Surtax payers have to meet the bill for their incomes being assessed for Surtax in respect of the year before last. How can they spend the money that they have not got? Is it not a fact that these Surtax reliefs proposed in the Budget cannot affect the revenue at the earliest until 1st January, 1958, and, therefore, cannot have any influence at all on the inflationary position, of which the right hon. Gentleman is speaking?

Mr. Jay: Surely, the hon. Member knows that these are earned income reliefs and that the P.A.Y.E. adjustments have already been made.

Mr. Nabarro: The right hon. Gentleman is exactly wrong. These Surtax reliefs cannot come into effect and be felt by the Surtax payer—[HON. MEMBERS:"Earned income reliefs."]—well, earned income reliefs which affect the Surtax payer. They do not alter the coding of an Income Tax payer. They cannot benefit him until 1st January next at the earliest.

Mr. Jay: The hon. Member is wrong both technically and in substance. Even if he was not wrong technically, it is the case that Surtax payers anticipate these future concessions. If the hon. Member wants any confirmation of that, let him look at the banking figures for the last two months and he will see the increase in bank loans, which has contributed to this inflationary pressure.


The noble Lord the Member for Dorset, South asked how this process has occurred. I gave the warning to the Chancellor in the Budget debate that, in the first place, the action he had taken in the Budget in this respect followed in no way from any economic analysis that he gave us in the Budget, and secondly, that in our view unless there was some factor that he had not revealed to the House, and that he has still not revealed, he was taking a grave risk with the gold reserve and the economic position of the country later in the year. I submit that that which we said in the Budget debate in April has been abundantly confirmed since then and that the consequences which we then predicted are now becoming evident to the country.

Mr. Nabarro: I rise only to correct the fallacy in the speech of the right hon. Member for Battersea, North (Mr. Jay). We are talking on the Amendment about earned income relief and its effect upon Surtax-payers in the bracket of income between £4,000 and £9,985 a year. In fact, these abatements in respect of earned income relief cannot affect the actual payment made by the Surtax-payer at the earliest date until 1st January, 1958. They did not in any way lead to a recoding on 21st June last.
I know this to be exactly true because, when these Budget proposals came in, I was in very grave doubt as to how the earned income relief affecting Surtax-payers would operate—whether by re-coding or by abatement of Surtax on the 1st January following, which would be, of course, the payment of Surtax in respect of assessment of the earned income of the individual for the year but one preceding. A ruling was given to me by the Inland Revenue that the earliest effects would be felt on the 1st January following. [HON. MEMBERS:"Schedule D."] On Schedule D—but these earned income reliefs that we are discussing are in respect of the Surtax-payer in either Schedule D or Schedule E.

Mr. Mitchison: Mr. Mitchisonrose—

Mr. Nabarro: Please allow me to finish. This is not an easy argument, by any means.
The right hon. Member for Battersea, North, therefore, might be in very small part right, but in the greater part he is wrong. It is the fact that the earliest date on which the monetary benefit can be felt by a Surtax-payer in respect of this earned income relief is 1st January next and in no part will be felt on and after 21st June, which is the date on which recoding for Income Tax takes place.

Mr. Houghton: All directors are assessable under Schedule E Pay-As-You-Earn. Managers and executives and others in employment are assessable under Schedule E, Pay-As-You-Earn. It is true that shopkeepers and self-employed traders are assessable under Schedule D, which is not Pay-As-You-Earn. All Schedule E payers have received recoding notices. Clause 11 (5) refers to the earliest date at which the benefits of the reliefs can be given, which was 21st June. Hon. Members who are assessed on Schedule E will know that they have already received the benefits of earned income relief beyond the point of £2,025 a year, if they are assessed under Schedule E, up to £10,000.
None of this earned income relief makes any difference to Surtax. The difference to Surtax is in the deduction of personal reliefs by £100 for marriage, children, etc. from Surtax liability but not earned income relief. My right hon. Friend was right when he said that, in respect of all deductions under Pay-As-You-Earn, the people assessed under Schedule E who will benefit from these reliefs are already receiving the benefit of them.

Mr. Nabarro: That was a very long intervention, and my own was not an intervention. My only observation on the somewhat technical intervention of the hon. Gentleman is that in the Amendment we are discussing there is nothing about Schedule D or Schedule E. The fact is that the earliest date on which monetary benefits can be derived by a Surtax-payer from this concession is on 1st January next. If the hon. Gentleman will see me after the debate, I will prove it.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes 224, Noes 172.

Division No. 167.]
AYES
[9.38 p.m.


Agnew, Sir Peter
Conant, Maj. Sir Roger
George, J. C. (Pollok)


Amery, Julian (Preston, N.)
Cooke, Robert
Glover, D.


Arbuthnot, John
Cooper, A. E.
Glyn, Col. R.


Armstrong, C. W.
Cooper-Key, E. M.
Godber, J. B.


Ashton, H.
Cordeaux, Lt.-Col. J. K.
Goodhart, Philip


Atkins, H. E.
Corfield, Capt. F. V.
Gower, H. R.


Baldock, Lt.-Cmdr. J. M.
Craddock, Beresford (Spelthorne)
Graham, Sir Fergus


Baldwin, A. E.
Crosthwaite-Eyre, Col. O. E.
Grant, W. (Woodside)


Balniel, Lord
Crowder, Petre (Ruislip—Northwood)
Grant-Ferris, Wg.Cdr. R.(Nantwich)


Barber, Anthony
Cunningham, Knox
Green, A.


Barlow, Sir John
Currie, G. B. H.
Gresham Cooke, R.


Baxter, Sir Beverley
Dance, J. C. G.
Grimston, Hon. John (St. Albans)


Beamish, Maj. Tufton
Davidson, Viscountess
Grimston, Sir Robert (Westbury)


Bell, Philip (Bolton, E.)
D'Avigdor-Goldsmid, Sir Henry
Gurden, Harold


Bell, Ronald (Bucks, S.)
Deedes, W. F.
Hall, John (Wycombe)


Bennett, F. M. (Torquay)
Digby, Simon Wingfield
Harris, Reader (Heston)


Bennett, Dr. Reginald
Donaldson, Cmdr. C. E. McA.
Harvey, Sir Arthur (Macclesfield)


Bevins, I. R. (Toxteth)
Doughty, C. J. A.
Heald, Rt. Hon. Sir Lionel


Bidgood, J. C.
du Cann, E. D. L.
Heath, Rt. Hon. E. R. G.


Biggs-Davison, J. A.
Dugdale, Rt. Hn. Sir T. (Richmond)
Henderson, John (Cathcart)


Birch, Rt. Hon. Nigel
Duncan, Sir James
Henderson-Stewart, Sir James


Bishop, F. P.
Duthie, W. S.
Hesketh, R. F.


Body, R. F.




Boothby, Sir Robert
Eden, J. B. (Bournemouth, West)
Hill, Mrs E. (Wythenshawe)


Bossom, Sir Alfred
Elliot, Rt. Hon. W. E. (Kelvingrove)
Hill, John (S. Norfolk)


Braine, B. R.
Elliott,R.W.(N'castle upon Tyne,N.)
Hinchingbrooke, Viscount


Braithwaite, Sir Albert (Harrow, W.)
Emmet, Hon. Mrs. Evelyn
Hirst, Geoffrey


Brooman-White, R. C.
Errington, Sir Eric
Hobson,John (Warwick &amp; Leam'gt'n)


Browne, J. Nixon (Craigton)
Erroll, F. J.
Holland-Martin, C. J.


Bryan, P.
Fell, A.
Hope, Lord John


Bullus, Wing Commander E. E.
Finlay, Graeme
Hornby, R. P.


Butcher, Sir Herbert
Fisher, Nigel
Hornsby-Smith, Miss M. P.


Butler,Rt.Hn.R.A.(Saffron Walden)
Fort, R.
Horobin, Sir Ian


Carr, Robert
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Horsbrugh, Rt. Hon. Dame Florence


Cary, Sir Robert
Freeth, Denzil
Howard, John (Test)


Chichester-Clark, R.
Gammans, Lady
Hudson, W. R. A. (Hull, N.)


Clarke, Brig. Terence (Portsmth, W.)
Garner-Evans, E. H.
Hughes Hallett, Vice-Admiral J.




Hughes-Young, M. H. C.
Maitland, Hon. Patrick (Lanark)
Ropner, Col. Sir Leonard


Hulbert, Sir Norman
Markham, Major Sir Frank
Russell, R. S.


Hurd, A. R.
Marlowe, A. A. H.
Schofield, Lt.-Col. W.


Hutchison, Michael Clark (E'b'gh.S.)
Marshall, Douglas
Scott-Miller, Cmdr. R.


Hutchison, Sir Ian Clark(E'b'gh, W.)
Mathew, R.
Sharples, R. C.


Hutchison, Sir James (Scotstoun)
Maude, Angus
Simon, J. E. S.(Middlesbrough, W.)


Hyde, Montgomery
Mawby, R. L.
Smithers, Peter (Winchester)


Hylton-Foster, Rt. Hon. Sir Harry
Maydon, Lt.-Comdr. S. L. C.
Soames, Christopher



Milllgan, Rt. Hon. W. R.
Spearman, Sir Alexander


Iremonger, T. L.
Morrison, John (Salisbury)
Speir, R. M.


Irvine, Bryant Godman (Rye)
Mott-Radclyffe, Sir Charles
Spens, Rt. Hn. Sir P.(Kens'gt'n, S.)


Jenkins, Robert (Dulwich)
Nabarro, G. D. N.
Stanley, Capt. Hon. Richard


Jennings, Sir Roland (Hallam)
Nairn, D. L. S.
Stevens, Geoffrey


Johnson, Dr. Donald (Carlisle)
Nicholls, Harmar
Steward, Harold (Stockport, S.)


Johnson, Eric (Blackley)
Nicholson, Godfrey (Farnham)
Steward, Sir William(Woolwich, W.)


Jones, Rt. Hon. Aubrey (Hall Green)
Nicolson, N.(B'n'm'th,E. &amp; Chr'ch)
Stoddart-Scott, Col. Sir Malcolm


Keegan, D.
Noble, Comdr. Rt. Hon. Allan
Storey, S.


Kerr, Sir Hamilton
Nugent, G. R. H.
Studholme, Sir Henry


Kershaw, J. A.
Oakshott, H. D.
Taylor, Sir Charles (Eastbourne)


Kimball, M.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Taylor, William (Bradford, N.)


Kirk, P. M.
Orr, Capt. L. P. S.
Teeling, W.


Lagden, G. W.
Orr-Ewing, Charles Ian (Hendon, N.)
Temple, John M.


Lambert, Hon. G.
Page, R. G.
Thomas, Leslie (Canterbury)


Lancaster, Col. C. G.
Pannell, N. A. (Kirkdale)
Thomas, P. J. M. (Conway)


Langford-Holt, J. A.
Partridge, E.
Thompson, Kenneth (Walton)


Leather, E. H. C.
Peyton, J. W. W.
Thorneycroft, Rt. Hon. P.


Leavey, J. A.
Pickthorn, K. W. M.
Thornton-Kemsley, C. N.


Leburn, W. G.
Pilkington, Capt. R. A.
Tilney, John (Wavertree)


Legge-Bourke, Maj. E. A. H.
Pitman, I. J.
Turner, H. F. L.


Legh, Hon. Peter (Petersfield)
Pitt, Miss E. M.
Turton, Rt. Hon. R. H.


Lindsay, Hon. James (Devon, N.)
Pott, H. P.
Vickers, Miss Joan


Lindsay, Martin (Solihull)
Powell, J. Enoch
Wakefield, Edward (Derbyshire, W.)


Linstead, Sir H. N.
Price, David (Eastleigh)
Wakefield, Sir Wavell (St. M'lebone)


Lloyd, Maj. Sir Guy (Renfrew, E.)
Price, Henry (Lewisham, W.)
Walker-Smith, Rt. Hon. Derek


Longden, Gilbert
Prior-Palmer, Brig. O. L.
Wall, Major Patrick


Lucas, Sir Jocelyn(Portsmouth, S.)
Profumo, J. D.
Ward, Rt. Hon. G. R. (Worcester)


Lucas, P. B. (Brentford &amp; Chlswick)
Raikes, Sir Victor
Ward, Dame Irene (Tynemouth)


Lucas-Tooth, Sir Hugh
Ramsden, J. E.
Whltelaw, W. S. I.


Macdonald, Sir Peter
Rawlinson, Peter
Williams, Paul (Sunderland, S.)


Mackie, J. H. (Galloway)
Redmayne, M.
Williams, R. Dudley (Exeter)


McLaughlin, Mrs. P.
Remnant, Hon. P.
Wills, G. (Bridgwater)


Maclay, Rt. Hon. John
Renton, D. L. M.
Woollam, John Victor


McLean, Neil (Inverness)
Ridsdale, J. E.
Yates, William (The Wrekin)


MacLeod, John (Ross &amp; Cromarty)
Robertson, Sir David



Macpherson, Niall (Dumfries)
Robinson, Sir Roland (Blackpool, S.)
TELLERS FOR THE AYES:


Maddan, Martin
Rodgers, John (Sevenoaks)
Mr. R. Thompson and


Maitland, Cdr. J. F. W. (Horncastle)
Roper, Sir Harold
Colonel J. H. Harrison.




NOES


Ainsley, J. W.
Dalton, Rt. Hon. H.
Hayman, F. H.


Albu, A. H.
Davies, Ernest (Enfield, E.)
Healey, Denis


Allen, Scholefield (Crewe)
Davies, Stephen (Merthyr)
Henderson, Rt. Hn. A. (Rwly Regis)


Awbery, S. S.
Deer, G.
Herbison, Miss M.


Bacon, Miss Alice
de Freitas, Geoffrey
Hobson, C. R. (Keighley)


Balfour, A.
Delargy, H. J.
Holman, P.


Benson, G.
Donnelly, D. L.
Holmes, Horace


Beswick, Frank
Ede, Rt. Hon. J. C.
Holt, A. F.


Bevan, Rt. Hon. A. (Ebbw Vale)
Edelman, M.
Houghton, Douglas


Blackburn, F.
Edwards, Rt. Hon. John (Brighouse)
Howell, Charles (Perry Barr)


Blyton, W. R.
Edwards, Rt. Hon. Ness (Caerphilly)
Hoy, J. H.


Boardman, H.
Edwards, Robert (Bilston)
Hubbard, T. F.


Bottomley, Rt. Hon. A. G.
Edwards, W. J. (Stepney)
Hughes, Cledwyn (Anglesey)


Bowden, H. W. (Leicester, S.W.)
Fernyhough, E.
Hughes, Emrys (S. Ayrshire)


Bowen, E. R. (Cardigan)
Fienburgh, W.
Hughes, Hector (Aberdeen, N.)


Boyd, T. C.
Finch, H. J.
Hunter, A. E.


Braddock, Mrs. Elizabeth
Forman, J. B>
Hynd, H. (Accrington)


Brockway, A. F.
Fraser, Thomas (Hamilton)
Irvine. A. J. (Edge Hill)


Brown, Rt. Hon. George (Belper)
Gaitskell, Rt. Hon. H. T. N.
Jay, Rt. Hon. D. P. T.


Brown, Thomas (Ince)
George,Lady Megan Lloyd(Car'then)
Jeger, George (Goole)


Burke, W. A.
Gibson, C. W.
Jeger,Mrs.Lena(Holbn &amp; St.Pncs.S.)


Butler, Herbert (Hackney, C.)
Greenwood, Anthony
Jones, David (The Hartlepools)


Butler, Mrs. Joyce (Wood Green)
Grenfell, Rt. Hon. D. R.
Jones, Elwyn (W. Ham, S.)


Callaghan, L. J.
Grey, C. F.
Jones, Jack (Rotherham)


Carmichael, J.
Griffiths, David (Rother Valley)
Jones, J. Idwal (Wrexham)


Castle, Mrs. B. A.
Griffiths, Rt. Hon. James (Llanelly)
Jones, T. W. (Merioneth)


Champion, A. J.
Griffiths, William (Exchange)
Kenyon, C.


Chapman, W. D.
Grimond, J.
Key, Rt. Hon. C. W.


Chetwynd, G. R.
Hale, Leslie
King, Dr. H. M.


Coldrick, W.
Hall, Rt. Hn. Glenvil (Colne Valley)
Lawson, G. M.


Collick, P. H. (Birkenhead)
Hamilton, W. W.
Lee, Frederick (Newton)


Craddock, George (Bradford, S.)
Hannan, W.
Lee, Miss Jennie (Cannock)


Cullen, Mrs. A.
Harrison, J. (Nottingham, N.)
Lever, Harold (Cheetham)







Lewis, Arthur
Pentland, N.
Swingler, S. T.


Logan, D. G.
Plummer, Sir Leslie
Sylvester, G. O.


Mabon, Dr. J. Dickson
Popplewell, E.
Taylor, Bernard (Mansfield)


MacColl, J. E.
Prentice, R. E.
Taylor, John (West Lothian)


MacDermot, Niall
Price, J. T. (Westhoughton)
Thomas, Iorwerth (Rhondda, W.)


McInnes, J.
Probert, A. R.
Thomson, George (Dundee, E.)


McKay, John (Wallsend)
Proctor, W. T.
Thornton, E.


MacPherson, Malcolm (Stirling)
Randall, H. E.
Tomney, F.


Mallalieu, E. L. (Brigg)
Rankin, John
Ungoed-Thomas, Sir Lynn


Mann, Mrs. Jean
Redhead, E. C.
Usborne, H. C.


Mason, Roy
Reeves, J.
Watkins, T. E.


Mitchison, G. R.
Rhodes, H.
Wells, Percy (Faversham)


Monslow, W.
Robens, Rt. Hon. A.
Wells, William (Walsall, N.)


Moody, A. S.
Roberts, Albert (Normanton)
West, D. G.


Morris, Percy (Swansea, W.)
Roberts, Goronwy (Caernarvon)
Wheeldon, W. E.


Mort, D. L.
Robinson, Kenneth (St. Pancras, N.)
White, Mrs. Eirene (E. Flint)


Moyle, A.
Ross, William
White, Henry (Derbyshire, N.E.)


Mulley, F. W.
Royle, C.
Wilkins, W. A.


Noel-Baker, Rt. Hn. P. (Derby, S.)
Short, E. W.
Willey, Frederick


O'Brien, Sir Thomas
Silverman, Julius (Aston)
Williams, David (Neath)


Oliver, G. H.
Skeffington, A. M.
Williams, Rev. Llywelyn (Ab'tillery)


Oram, A. E.
Slater, Mrs. H. (Stoke, N.)
Williams, Rt. Hon. T. (Don Valley)


Orbach, M.
Slater, J. (Sedgefield)
Williams, W. R. (Openshaw)


Oswald, T.
Smith, Ellis (Stoke, S.)
Willis, Eustace (Edinburgh, E.)


Owen, W. J.
Sorensen, R. W.
Wilson, Rt. Hon. Harold (Huyton)


Padley, W. E.
Soskice, Rt. Hon. Sir Frank
Woodburn, Rt. Hon. A.


Paling, Rt. Hon. W. (Dearne Valley)
Sparks, J. A.
Woof, R. E.


Paling, Will T. (Dewsbury)
Steele, T.
Yates, V. (Ladywood)


Palmer, A. M. F.
Stewart, Michael (Fulham)
Zilliacus, K.


Pannell, Charles (Leeds, W.)
Stonehouse, John



Pargiter, G. A.
Strachey, Rt. Hon. J.
TELLERS FOR THE NOES:


Parker, J.
Summerskill, Rt. Hon. E.
Mr. Pearson and Mr. Simmons.

Division No. 168.
AYES
[10.26 p.m.


Agnew, Sir Peter
Gresham Cooke, R.
Nabarro, G. D. N.


Aitken, W. T.
Grimond, J.
Nairn, D. L. S.


Amery, Julian (Preston, N.)
Grimston, Hon. John (St. Albans)
Nicholls, Harmar


Arbuthnot, John
Grimston, Sir Robert (Westbury)
Nicholson, Godfrey (Farnham)


Armstrong, C. W.
Hall, John (Wycombe)
Nicolson, N. (B'n'm'th, E. &amp;Chr'ch)


Ashton, H.
Harris, Reader (Heston)
Noble, Comdr. Rt. Hon. Allan


Atkins, H. E.
Harrison, Col. J. H. (Eye)
Oakshott, H. D.


Baldock, Lt -Cmdr. J. M.
Harvey, Sir Arthur (Macclesfield)
O'Neill,Hn. Phelim (Co. Antrim, N.)


Baldwin, A. E.
Heald, Rt. Hon. Sir Lionel
Orr, Capt. L. P. S.


Balniel, Lord
Heath, Rt. Hon. E. R. G.
Orr-Ewing, Charles Ian (Hendon.N.)


Barber, Anthony
Henderson, John (Cathcart)
Page, R. G.


Barlow, Sir John
Henderson-Stewart, Sir James
Pannell, N. A. (Kirkdale)


Barter, John
Hesketh, R. F.
Partridge, E.


Baxter, Sir Beverley
Hill, Mrs. E. (Wythenshawe)
Peyton, J. W. W.


Bell, Philip (Bolton, E.)
Hill, John (S. Norfolk)
Piokthorn, K. W. M.


Bell, Ronald (Bucks, S.)
Hinchingbrooke, Viscount
Pilkington, Capt. R. A


Bennett, F. M. (Torquay)
Hirst, Geoffrey
Pitt, Miss E. M.


Bevins, J. B. (Toxteth)
Hobson,John(Warwick &amp; Leam'gt'n)
Pott, H. P.


Bidgood, J. C.
Holland-Martin, C. J.
Powell, J. Enoch


Birch, Rt. Hon. Nigel
Holt, A. F.
Price, David (Eastleigh)


Bishop, F. P.
Hope, Lord John
Price, Henry (Lewisham, W.)


Body, R. F.
Hornby, R. P.
Prior-Palmer, Brig. O. L.


Bossom, Sir Alfred
Hornsby-Smith, Miss M. P.
Profumo, J. D.


Bowen, E. R, (Cardigan)
Horsbrugh, Rt. Hon. Dame Florence
Raikes, Sir Victor


Braine, B. R.
Howard, John (Test)
Ramsden, J. E.


Brooman-White, R. C.
Hudson, W. R. A. (Hull, N.)
Rawlinson, Peter


Browne, J. Nixon (Craigton)
Hughes Hallelt, Vice-Admiral J.
Redmayne, M.


Bullus, Wing Commander E. E.
Hughes-Young, M. H. C.
Remnant, Hon. P.


Butcher, Sir Herbert
Hurd, A. R.
Ridsdale, J. E


Butler,Rt.Hn.R.A.(Saffron Walden)
Hutchison, Michael Clark (E'b'gh,S.)
Robinson, Sir Roland (Blackpool,S.)>


Carr, Robert
Hutchison, Sir IanClark(E'b'gh, W.)
Rodgers, John (Sevenoaks)


Chichester-Clark, R.
Hyde, Montgomery
Roper, Sir Harold


Clarke, Brig. Terence (Portsmth, W.)
Hylton-Foster, Rt. Hon. Sir Harry
Ropner, Col. Sir Leonard


Conant, Maj. Sir Roger
Iremonger, T. L.
Schofield, Lt.-Col. W.


Cooke, Robert
Irvine, Bryant Godman (Rye)
Scott-Miller, Cmdr. R.


Cooper, A. E.
Jenkins, Robert (Dulwich)
Sharples, R. C.


Cordeaux, Lt.-Col. J. K.
Jennings, Sir Roland (Hallam)
Simon, J. E. S. (Middlesbrough, W.)


Corfield, Capt. F. V.
Johnson, Dr. Donald (Carlisle)
Smithers, Peter (Winchester)


Craddock, Beresford (Spelthorne)
Johnson, Eric (Blackley)
Spearman, Sir Alexander


Crosthwaite-Eyre, Col. O. E.
Jones. Rt. Hon. Aubrey (Hall Green)
Speir, R. M.


Crowder, Petre (Ruislip—Northwood)
Joseph, Sir Keith
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Cunningham, Knox
Keegan, D.
Stanley, Capt, Hon. Richard


Currie, G. B. H.
Kerr, Sir Hamilton
Stevens, Geoffrey


Dance, J. C. G.
Kershaw, J. A.
Steward, Harold (Stockport, S.)


Davidson, Viscountess
Kimball, M.
Steward, Sir William (Woolwich, W.)


D'Avigdor-Goldsmid, Sir Henry
Kirk, P. M.
Stoddart-Scott, Col. Sir Malcolm


Deedes, W. F.
Lambert, Hon. G.
Storey, S.


Digby, Simon Wingfield
Langford.Holt, J. A.
Studholme, Sir Henry


Donaldson, Cmdr. C. E. McA.
Leather, E. H. C.
Taylor, Sir Charles (Eastbourne)


Doughty, C J. A.
Leavey, J. A.
Taylor, William (Bradford, N.)


du Cann, E. D. L.
Leburn, W. G.
Teeling, W.


Duncan, Sir James
Legge-Bourke, Maj. E. A. H.
Temple, John M.


Eden, J. B. (Bournemouth, West)
Legh, Hon. Peter (Petersfield)
Thomas, Leslie (Canterbury)


Elliot, Rt. Hon. W. E. (Kelvingrove)
Lindsay, Hon. James (Devon, N.)
Thomas, P, J. M. (Conway)


Elliott,R.W.(N'castle upon Tyne.N.)
Lindsay, Martin (Solihull)
Thompson, Kenneth (Walton)


Emmet, Hon. Mrs. Evelyn
Linstead, Sir H. N.
Thompson, Lt.-Cdr. R. (Croydon, S.)


Errington, Sir Eric
Longden, Gilbert
Thorneycroft, Rt.Hon. P.


Finlay, Graeme
Lucas, Sir Jocelyn (Portsmouth, S.)
Thornton-Kemsley, C. N.


Fisher, Nigel
Lucas,P.B.(Brentford &amp; Chiswick)
Tllney, John (Wavertree)


Fletcher-Cooke, C.
Lucas-Tooth, Sir Hugh
Turton, Rt. Hon. R. H.


Fort, R.
Macdonald, Sir Peter
Vaughan-Morgan, J. K.


Fraser.Sir Ian (M'cmbe &amp; Lonsdale)
Mackie, J. H. (Galloway)
Vickers, Miss Joan


Freeth, Denzil
McLaughlin, Mrs. P.
Wakefield, Edward (Derbyshire, W.)


Gammans, Dame Ann Muriel
Maclay, Rt, Hon. John
Wakefield,Sir Wavell (St. M'lebone)


Garner-Evans, E. H.
McLean, Neil (Inverness)
Walker-Smith, Rt. Hon. Derek


George, J. C. (Pollok)
Macpherson, Niall (Dumfries)
Wall, Major Patrick


Gibson-Watt, D.
Maddan, Martin
Ward, Rt. Hon. G. R. (Worcester)


Glover, D.
Maitland,Cdr.J.F.W.(Horncastle)
Whitelaw, W. S. I.


Glyn, Col. R.
Markham, Major Sir Frank
Williams, Paul (Sunderland, S.)


Godber, J. B.
Marlowe, A. A. H.
Williams, R. Dudley (Exeter)


Goodhart, Philip
Mathew, R.
Woollam, John Victor


Gower, H. R.
Maude, Angus
Yates, William (The Wrekin)


Graham, Sir Fergus
Mawby, R. L.



Grant, W. (Woodside)
Maydon, Lt.-Comdr. S. L. C.
TELLERS FOR THE AYES:


Grant-Ferris Wg Cdr. R. (Nantwich)
Morrison, John (Salisbury)
Mr. Wills and Mr. Bryan.


Green, A.
Mott-Radclyffe, Sir Charles








NOES


Ainsley, J. W.
Healey, Denis
Pearson, A.


Albu, A. H.
Henderson, Rt. Hn. A. (Rwly Regis)
Pentland, N.


Allen, Scholefield (Crewe)
Herbison, Miss M.
Plummer, Sir Leslie


Awbery, S. S.
Hobson, C. R. (Keighley)
Popplewell, E.


Balfour, A.
Holmes, Horace
Prentice, R. E.


Benson, G.
Houghton, Douglas
Probert, A. R.


Blackburn, F.
Howell, Charles (Perry Barr)
Randall, H. E.


Blenkinsop, A.
Hoy, J. H.
Rankin, John


Blyton, W. R.
Hubbard, T. F.
Redhead, E. C.


Boardman, H.
Hughes, Cledwyn (Anglesey)
Rhodes, H.


Bottomley, Rt. Hon. A. G.
Hughes, Emrys (S. Ayrshire)
Robens, Rt. Hon. A.


Bowden, H. W. (Leicester, S.W.)
Hughes, Hector (Aberdeen, N.)
Roberts, Albert (Normanton)


Boyd, T. C.
Hunter, A. E.
Roberts, Goronwy (Caernarvon)


Braddock, Mrs. Elizabeth
Hynd, H. (Accrington)
Robinson, Kenneth (St. Pancras, N.)


Brockway, A. F.
Hynd, J. B. (Attercliffe)
Ross, William


Brown, Rt. Hon. George (Belper)
Jay, Rt. Hon. D. P. T.
Royle C.


Callaghan, L. J.
Jeger,Mrs.Lena (Holbn &amp; St.Pnos,S.)
Short, E. W.


Carmichael, J.
Jones, David (The Hartiepools)
Silverman, Julius (Aston)


Castle, Mrs. B. A.
Jones, Elwyn (West Ham, S.)
Simmons, C. J. (Brierley Hill)


Champion, A. J.
Jones, Jack (Rotherham)
Skeffington, A. M.


Chapman, W. D.
Jones, J. Idwal (Wrexham)
Slater, Mrs. H. (Stoke, N.)


Chetwynd, G. R.
Jones, T. W. (Merioneth)
Slater, J. (Sedgefield)


Coldrick, W.
Kenyon, C.
Smith, Ellis (Stoke, S.)


Collick, P. H. (Birkenhead)
Key, Rt. Hon. C. W.
Sorensen, R. W.


Craddock, George (Bradford, S.)
King, Dr. H. M.
Soskice, Rt. Hon. Sir Frank


Cullen, Mrs. A.
Lawson, G. M.
Sparks, J. A.


Dalton, Rt. Hon. H.
Lee, Frederick (Newton)
Steele, T.


Davies, Ernest (Enfield, E.)
Lever, Harold (Cheetham)
Stewart, Michael (Fulham)


Davies, Stephen (Merthyr)
Lewis, Arthur
Stonehouse, John


Deer, G.
Logan, D. G.
Strachey, Rt. Hon. J.


de Freitas, Geoffrey
Mabon, Dr. J. Dickson
Summerskill, Rt. Hon. E.


Delargy, H. J.
MacColl, J. E.
Sylvester, G. O.


Donnelly, D. L.
MacDermot, Niall
Taylor, Bernard (Mansfield)


Ede, Rt. Hon. J. C.
Mclnnes, J.
Taylor, John (West Lothian)


Edelman, M.
McKay, John (Wallsend)
Thomas, Iorwerth (Rhondda, W.)


Edwards, Rt. Hon. John (Brighouse)
MacPherson, Malcolm (Stirling)
Thomson, George (Dundee, E.)


Edwards, Rt. Hon. Ness (Caerphilly)
Mallalleu, E. L. (Brigg)
Thornton, E.


Edwards, Robert (Bilston)
Mann, Mrs. Jean
Tomney, F.


Edwards, W. J. (Stepney)
Mason, Roy
Ungoed-Thomas, Sir Lynn


Fernyhough, E.
Mitchison, G. R.
Usborne, H. C.


Fienburgh, W.
Monslow, W.
Watkins, T. E.


Finch, H. J.
Moody, A. S.
Wells, William (Walsall, N.)


Forman, J. C.
Morris, Percy (Swansea, W.)
Wheeldon, W. E.


Fraser, Thomas (Hamilton)
Mort, D. L.
White, Mrs. Eirene (E. Flint)


Gaitskell, Rt. Hon. H. T. N.
Moyle, A.
White, Henry (Derbyshire, N.E.)


George,Lady Megan Lloyd(Car'then)
Mulley, F. W.
Willey, Frederick


Gibson, C. W.
Noel-Baker, Rt. Hon. P. (Derby, S.)
Williams, David (Neath)



O'Brien, Sir Thomas
Williams, Rev. Llywelyn (Ab'tillery)


Greenwood, Anthony
Oliver, G. H.
Williams, W. R. (Openshaw)


Grenfell, Rt. Hon. D. R.
Oram, A. E.
Willis, Eustace (Edinburgh, E.)


Grey, C. F.
Orbach, M.
Wilson, Rt. Hon. Harold (Huyton)


Griffiths, David (Rother Valley)
Oswald, T.
Woodburn, Rt. Hon. A.


Griffiths, Rt. Hon. James (Llanelly)
Owen, W. J.
Woof, R. E.


Hale, Leslie
Padley, W. E.
Yates, V. (Ladywood)


Hall, Rt. Hn. Glenvil (Colne Valley)
Paling, Rt. Hon. W. (Dearne Valley)
Zilliacus, K.


Hamilton, W. W.
Palmer, A. M. F.



Hannan, W.
Pannell, Charles (Leeds, W.)
TELLERS FOR THE NOES:


Harrison, J. (Nottingham, N.)
Pargiter, G. A.
Mr. J. T. Price and Mr. Wilkins.


Hayman, F. H.
Parker, J.

10.35 p.m.

Mr. Houghton: I beg to move, in page 7, line 41, after "by", to insert:
inserting after the word 'establishment' in subsection (1) the words 'or for the year of assessment has been totally incapacitated' by".
This Amendment deals with a comparatively small matter, and we hope that the right hon. Gentleman will be able to make this deserving concession to the incapacitated child. It was a matter dealt with in the report of the Royal Commission on Taxation, where, in paragraph 193, the Commission drew attention to the fact that whereas a child undergoing

further education after the age of 16 entitled the parent to a continuation of the child allowance, a child over the age of 16 totally incapacitated could not qualify for the child allowance though the parent was entitled to the dependent relative relief.
The Commission drew attention to the fact that whereas the child allowance was taxed at £85, as it was then, the dependent relative relief was at £60, and the Commission said:
In these circumstances the drop in the allowance from £85 to £60 seems a needless hardship; and we recommend that a person


who is receiving a child allowance in respect of an incapacitated child when it attains the age of 16 should be entitled to the same figure of allowance for the intervening years until it attains 21, always assuming that the state of incapacity continues during any year of claim".
Since those words were written, the child allowance has gone up, and in Clause 11 of this Bill for a child over 16 continuing education the relief now is £150. As the House will remember, for a child over 11 it is £125. I presume that an incapacitated child over 11 will qualify for the child allowance of £125 but at the age of 16 will not qualify for any child allowance at all. Beyond that, the parent will qualify only for the dependent relative allowance, which is lower, as the Royal Commission remarked. We propose, therefore, that the relief for an incapacitated child for the whole of the year of assessment over the age of 16 up to the age of 21 shall have the same tax relief as for a child of the same age continuing education and receiving therefore the higher child relief of £150.
A great strain on household resources, and many other problems, accompany the parents who have incapacitated children rising to adult years. The Royal Commission was right in suggesting that such parents should not be worse off than parents of children able to continue education after 16. We hope that the right hon. Gentleman will see his way to pick out this deserving additional relief from the Commission's Report. The cost would be very small and would not give any further twist to the inflationary spiral. This is a human as well as a taxation problem, and we hope that at this late stage of our Finance Bill discussions the right hon. Gentleman will be able to make the concession.

Mr. Jay: I beg to second the Amendment.

Mr. Powell: The hon. Member for Sowerby (Mr. Houghton) has drawn attention to the fact that at age 16 the allowance receivable by the parents of an incapacitated child will fall from £125, which is the amount of the child allowance from 11-plus to 16-plus, to £60, the amount of the dependent relative allowance. That was the fall to which—although there was then a smaller child allowance—the Royal Commission drew attention.
The child allowance and the dependent relative allowance are only part of the picture. It is true that at age 21—this was the reason why the Royal Commission brought age 21 into this matter at all—the parents can make a payment of an annuity to a child under a covenant; but I notice that the Opposition have not included that age-limit in the proposal which is before the House, but would propose to grant the full child allowance of £150 without limit of age.
There is, however, another and, I believe, much more relevant factor which comes into play at the age of 16. Irrespective of the means of the parents, the State then steps in and pays a grant to the incapacitated child—a National Assistance grant without regard to the means of the parents—which rises from 23s. 6d. at age 16 by gradations to 36s.—£3 a week or £150 a year —at age 21.
Therefore, in the case of greatest hardship, where the burden of an incapacitated child must necessarily weigh most heavily on the parents, from 16 onwards the State steps in and puts an amount of additional income into that house which exceeds the maximum that could possibly be gained by means of the child allowance at its upper figure of £150 a year. I suggest that that is the right way of dealing with the burden and problem of an incapacitated child, and not by a special dependent relative allowance which would help least those with the least resources. This is a direct payment which will, on the contrary, help most where the need is greatest.
10.45 p.m.
There is another reason why I suggest that we ought not to make this special exception from the general law as to dependent relatives by distinguishing the incapacitated child. As the years went on, it would become impossible to justify £150 dependent relative allowance for a child and only £60 for a person in any other relationship but equally dependent upon the taxpayer. In fact, this would in practice inevitably mean that the dependent relative allowance would have to be adjusted to the same figure as the full child allowance, which, of course, would have major financial and other repercussions. I would say to the House, therefore, that I do not believe that this problem of the drop in tax relief for the


parents of an incapacitated child really exists as the Royal Commission represented it. In fact, in carrying this relief above the age of 16 for an incapacitated child, we should not only create a gross anomaly and sense of grievance in regard to other incapacitated and dependent relatives, but we should not be taking the most direct and most helpful way of assisting parents in this position, which is done at the moment by the State stepping in directly through the National Assistance Board.

Mr. Godfrey Nicholson: I listened with great interest to what my hon. Friend the Financial Secretary said. I think that this calls for some comment. Surely one can imagine that if the Amendment were accepted it would actually save money, because many people would prefer to keep their incapacitated child out of their own income, for which they could get relief for Income Tax purposes, and fall back on National Assistance. I can imagine many families which would rather not draw National Assistance, and so money would be saved for the Treasury.
I am a little tired of hearing that no exception can ever be admitted because of the concatenation of consequences it would carry in its train. Surely, that is, to some extent, a confession of failure. People should be encouraged to look after their incapacitated children out of their own income if that can be made possible for them by the State. I do hope that in future Finance Bills this matter will be looked at again.

Mr. Houghton: I can speak again only by leave of the House. Perhaps I may be permitted to do so for two minutes to comment on what the Financial Secretary said. It is true that in some cases the parents of the incapacitated child may apply for National Assistance, but in other cases they would not. Many parents who are taxpayers would feel inhibited from applying for National Assistance for their incapacitated child and would prefer to have their need met by tax relief.
There is nothing in this Amendment which restrains or restricts in any way applications to the National Assistance Board for the special help which is available in case of need. With regard to the comparison between the incapacitated child and another dependent relative, I think the House would agree that a child stands in a much closer relationship to the parent than any other dependent relative can to the taxpayer. There is something very special about that. It would be unwise for us to compare incapacitated children with other dependent relatives. We should rather compare an incapacitated child with a child of the same age who is fit and well and able to continue normal education.
I hope that, in the circumstances, the House will mark its approval of the recommendation of the Royal Commission by voting for the Amendment.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 162, Noes 207.

Division No.169.]
AYES
[10.50 p.m.


Ainsley, J. W.
Cullen, Mrs A.
Hall, Rt. Hn. Glenvil (Colne Valley)


Albu, A. H.
Dalton, Rt. Hon. H.
Hannan, W.


Allen, Scholefield (Crewe)
Deer, G.
Harrison, J. (Nottingham, N.)


Awbery, S. S.
de Freitas, Geoffrey
Hayman, F. H.


Balfour, A.
Delargy, H. J.
Healey, Denis


Benson, G.
Donnelly, D. L.
Henderson, Rt. Hn. A. (Rwly Regis)


Blackburn, F.
Ede, Rt. Hon. J. C.
Herbison, Miss M.


Blenkinsop, A.
Edelman, M.
Hobson, C. R. (Keighley)


BIyton, W. R.
Edwards, Rt. Hon. John (Brigthouse)
Holmes, Horace


Boardman, H.
Edwards, Rt. Hon. Ness (Caerphilly)
Holt, A. F.


Bottomley, Rt. Hon. A. G.
Edwards, W. J. (Stepney)
Houghton, Douglas


Bowden, H. W. (Leicester, S. W.)
Fernyhough, E.
Howell, Charles (Perry Barr)


Bowen, E. R. (Cardigan)
Fienburgh, W.
Hoy, J. H.


Boyd, T. C.
Finch, H. J.
Hubbard, T. F.


Braddock, Mrs. Elizabeth
Forman, J. C.
Hughes, Cledwyn (Anglesey)


Brockway, A. F.
Fraser, Thomas (Hamilton)
Hughes, Emrys (S. Ayrshire)


Brown, Rt, Hon. George (Belper)
George, Lady Megan Lloyd(Car'then)
Hughes, Hector (Aberdeen, N.)


Callaghan, L. J.
Gibson, C. W.
Hunter, A. E.


Carmichael, J.
Greenwood, Anthony
Hynd, H. (Accrington)


Castle, Mrs. B. A.
Grenfell, Rt. Hon. D. R.
Hynd, J. B. (Attercliffe)


Champion, A. J.
Grey, C. F.
Jay, Rt. Hon. D. P. T.


Chetwynd, G. R.
Griffiths, David (Rother Valley)
Jeger, Mrs.Lena(Holbn &amp; St.Pncs,S.>


Coldrick, W.
Griffiths, Rt. Hon. James (Llanelly)
Jones, David (The Hartlepools)


Collick, P. H. (Birkenhead)
Grimond, J.
Jones, Elwyn (W. Ham, S.)


Craddock, George (Bradford, S.)
Hale, Leslie
Jones, Jack (Rotherham)




Jones, J. Idwal (Wrexham)
Padley, W. E.
Steele, T.


Jones, T. W. (Merioneth)
Paling, Rt. Hon. W. (Dearne Valley)
Stewart, Michael (Fulham)


Kenyon, C.
Palmer, A. M. F.
Stonehouse, John


King, Dr. H. M.
Pannell, Charles (Leeds, W.)
Summerskill, Rt. Hon. E.


Lawson, G. M.
Pargiter, G. A.
Sylvester, G. O.


Lee, Frederick (Newton)
Parker, J.
Taylor, Bernard (Mansfield)


Lever, Harold (Cheetham)
Pearson, A.
Taylor, John (West Lothian)


Lewis, Arthur
Pentland, N.
Thomas, Iorwerth (Rhondda, W.)


Logan, D. G.
Plummer, Sir Leslie
Thomson, George (Dundee, E.)


Mabon, Dr. J. Dickson
Popplewell, E.
Thornton, E.


MacColl, J. E.
Prentice, R. E.
Ungoed-Thomas, Sir Lynn


MacDermott, Niall
Probert, A. R.
Usborne, H. C.


Mclnnes, J.
Randall, H. E.
Wade, D. W.


McKay, John (Wallsend)
Rankin, John
Watkins, T. E.


MacPherson, Malcolm (Stirling)
Redhead, E. C.
Wells, William (Walsall, N.)


Mallalieu, E. L. (Brigg)
Rhodes, H.
Wheeldon, W. E.


Mann, Mrs. Jean
Robens, Rt. Hon. A.
White, Mrs. Eirene (E. Flint)


Mason, Roy
Roberts, Albert (Normanton)
White, Henry (Derbyshire, N.E.)


Mitchison, G. R.
Roberts, Goronwy (Caernarvon)
Willey, Frederick


Monslow, W.
Robinson,Kenneth (St. Pancras, N.)
Williams, David (Neath)


Moody, A. S.
Ross, William
Williams, Rev. Llywelyn (Ab'tillery)


Morris, Percy (Swansea, W.)
Royle, C.
Williams, W. R. (Openshaw)


Moyle, A.
Short, E. W.
Willis, Eustace (Edinburgh, E.)


Mulley, F. W.
Silverman, Julius (Aston)
Wilson, Rt. Hon. Harold (Huyton)


O'Brien, Sir Thomas
Simmons, C. J. (Brierley Hill)
Woodburn, Rt. Hon. A.


Oliver, G. H.
Slater, Mrs. H. (Stoke, N.)
Woof, R. E.


Oram, A. E.
Slater, J. (Sedgefield)
Yates, V. (Ladywood)


Orbach, M.
Sorensen, R. W.



Oswald, T.
Soskice, Rt. Hon. Sir Frank
TELLERS FOR THE AYES:


Owen, W. J.
Sparks, J. A.
Mr. J T. Price and Mr. Wilkins




NOES


Agnew, Sir Peter
Errington, Sir Eric
Iremonger, T. L.


Aitken, W. T.
Finlay, Graeme
Irvine, Bryant Godman (Rye)


Amery, Julian (Preston, N.)
Fisher, Nigel
Jenkins, Robert (Dulwich)


Arbuthnot, John
Fletcher-Cooke, C.
Jennings, Sir Roland (Hallam)


Armstrong, C. W.
Fort, R.
Johnson, Dr. Donald (Carlisle)


Ashton, H.
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Johnson, Eric (Blackley)


Atkins, H. E.
Gammans, Dame Ann Muriel
Jones, Rt. Hon. Aubrey (Hall Green)


Baldock, Lt.-Cmdr. J. M.
Garner-Evans, E. H.
Joseph, Sir Keith


Baldwin, A. E.
George, J. C. (Pollok)
Keegan, D.


Balniel, Lord
Gibson-Watt, D.
Kershaw, J. A.


Barber, Anthony
Glover, D.
Kimball, M.


Barlow, Sir John
Glyn, Col. R.
Kirk, P. M.


Barter, John
Godber, J. B.
Lambert, Hon. G.


Baxter, Sir Beverley
Goodhart, Philip
Langford-Holt, J. A.


Bell, Philip (Bolton, E.)
Gower, H. R.
Leather, E. H. C.


Bennett, F. M. (Torquay)
Graham, Sir Fergus
Leavey, J. A.


Bevins, J. R. (Toxteth)
Grant, W. (Woodside)



Bidgood, J. C.
Grant-Ferris, Wg Cdr. R. (Nantwich)
Leburn, W. G.


Birch, Rt. Hon. Nigel
Green, A.
Legge-Bourke, Maj. E. A. H.


Bishop, F. P.
Gresham Cooke, R.
Legh, Hon. Peter (Petersfield)


Body, R. F.
Grimston, Sir Robert (Westbury)
Lindsay, Hon. James (Devon, N.)


Bossom, Sir Alfred
Hall, John (Wycombe)
Lindsay, Martin (Solihull)


Browne, J. Nixon (Craigton)
Harrison, Col. J. H. (Eye)
Linstead, Sir H. N.


Bullus. Wing Commander E. E.
Harvey, Sir Arthur (Macclesfield)
Longden, Gilbert


Butcher, Sir Herbert
Head, Rt. Hon. A. H.
Lucas, Sir Jocelyn (Portsmouth, S.)


Carr, Robert
Heald, Rt. Hon. Sir Lionel
Lucas, P. B. (Brentford &amp; Chiswick)


Chichester-Clark, R.
Heath, Rt. Hon. E. R. G.
Lucas-Tooth, Sir Hugh


Clarke, Brig. Terence (Portsmth, W.)
Henderson, John (Cathcart)
Macdonald, Sir Peter


Conant, Maj. Sir Roger
Henderson-Stewart, Sir James
Mackie, J. H. (Galloway)


Cooke, Robert
Hesketh, R. F.
McLaughlin, Mrs. P.


Cooper, A. E.
Hill, Mrs. E. (Wythenshawe)
Maclean, Fitzroy (Lancaster)


Cordeaux, Lt.-Col. J. K.
Hill, John (S. Norfolk)
McLean, Neil (Inverness)


Corfield, Capt. F. V.
Hinchingbrooke, Viscount
Macpherson, Niall (Dumfries)


Craddock, Beresford (Spelthorne)
Hirst, Geoffrey
Maddan, Martin


Crosthwaite-Eyre, Col. O. E.
Hobson,John(Warwick &amp; Leam'gt'n)
Maitland, Cdr. J. F. W. (Horncastle)


Cunningham, Knox
Holland-Martin, C. J.
Markham, Major Sir Frank


Currie, G. B. H.
Hope, Lord John
Marlowe, A. A. H.


Dance, J. C. G.
Hornby, R. P.
Mathew, R.


Davidson, Viscountess
Hornsby-Smith, Miss M. P.
Mawby, R. L.


D'Avigdor-Goldsmid, Sir Henry
Horsbrugh, Rt. Hon. Dame Florence
Maydon, Lt.-Comdr. S. L. C.


Deedes, W. F.
Howard, John (Test)
Morrison, John (Salisbury)


Digby, Simon Wingfield
Hudson, W. R. A. (Hull, N.)
Mott-Radclyffe, Sir Charles


Donaldson, Cmdr. C. E. McA.
Hughes Hallett, Vice-Admiral J.
Nabarro, G. D. N.


Doughty, C. J. A.
Hughes-Young, M. H. C.
Nairn, D. L. S.


du Cann, E. D. L.
Hurd, A. R.
Nicholls, Harmar


Eden, J. B. (Bournemouth, W.)
Hutchison, Michael Clark (E'b'gh,S.)
Nicholson, Godfrey (Farnham)


Elliot, Rt. Hon. W. E. (Kelvingrove)
Hutchison, Sir Ian Clark (E'b'gh, W.)
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)


Elliott,R.W.(N'castle upon Tyne,N.)
Hyde, Montgomery
Oakshott, H. D.


Emmett, Hon. Mrs. Evelyn
Hylton-Foster, Rt. Hon. Sir Harry
O'Neill, Hn. Phelim (Co. Antrim,N.)







Orr-Ewing, Charles Ian (Hendon, N.)
Roper, Sir Harold
Thomas, P. J, M. (Conway)


Page, R. G.
Ropner, Col. Sir Leonard
Thompson, Kenneth (Walton)


Pannell, N. A. (Kirkdale)
Schofield, Lt.-Col. W.
Thompson, Lt.-Cdr. R, (Croydon,S.)


Partridge, E.
Scott-Miller, Cmdr. R.
Thorneycroft, Rt. Hon. P.


Paton, John
Sharples, R. C.
Thornton-Kemsley, C. N.


Pickthorn, K. W. M.
Simon, J. E. S. (Middlesbrough, W.)
Tilney, John (Wavertree)


Pilkington, Capt. R. A.
Smithers, Peter (Winchester)
Turton, Rt. Hon. R. H.


Pitt, Miss E. M.
Speir, R. M.
Vaughan-Morgan, J. K.


Pott, H. P.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Vickers, Miss Joan


Powell, J. Enoch
Stanley, Capt. Hon. Richard
Wakefield, Edward (Derbyshire, W.)


Price, David (Eastleigh)
Stevens, Geoffrey
Wakefield, Sir Wavell (St. M'lebone)


Price, Henry (Lewisham, W.)
Steward, Harold (Stockport, S.)
Walker-Smith, Rt. Hon. Derek


Prior-Palmer, Brig. O. L.
Steward, Sir William (Woolwich, W.)
Wall, Major patrick)


Profumo, J. D.
Stoddart-Scott, Col. M.
Ward, Rt. Hon. G. R. (Worcester)


Ramsden, J. E.
Storey, S.
Whitelaw, W. S. I.


Rawlinson, Peter
Studholme, Sir Henry
Williams, Paul (Sunderland, S.)


Redmayne, M.
Taylor, Sir Charles (Eastbourne)
Wills, C. (Bridgwater)


Remnant, Hon. P.
Taylor, William (Bradford, N.)
Woollam, John Victor


Ridsdale, J. E.
Teeling, W.
Yates, William (The Wrekin)


Robinson, Sir Roland (Blackpool, S.)
Temple, John M.



Rodgers, John (Sevenoaks)
Thomas, Leslie (Canterbury)
TELLERS FOR THE NOES:




Mr. Bryan and Mr. Brooman-White.

Further consideration of the Bill, as amended, adjourned.—[Mr. P. Thorneycroft.]

Bill, as amended (in Committee and on recommittal), to be further considered Tomorrow.

AGRICULTURE (HEATHER BURNING)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Oakshott.]

10.59 p.m.

Mr. Rupert Speir: I am sure that the vital importance of a good young heather crop is well known to the Minister and to the county agricultural executive committees, but the simple fact is that, unless the hill farmers get an adequate supply of young heather, and unless it is burned regularly, it is useless as a crop for both sheep and for game. Furthermore, the older the heather gets the more fiercely it burns, and, therefore, the greater is the fire danger for neighbouring occupiers.
Events in Northumberland, and even, perhaps in Durham, have clearly demonstrated in the early months of this year that there is a need for a different and more flexible attitude on the part of the Ministry towards the administration of the heather-burning Regulations. In fact, all those responsible for administering these Regulations require to approach this subject in a less rigid manner. The Regulations concerned are the Heather and Grass Burning Regulations, 1949, which were made under the Hill Farming Act, 1946.
No doubt it will come as a surprise to many people that farmers are not allowed by law to burn heather when they think it necessary and desirable. But, as the law is at present, burning is prohibited in England and Wales after the end of March and before the beginning of November. Generally it is prohibited, but there are licences, either general or special, which can be obtained.
My submission is that this licensing system is too rigid and unimaginative and needs revision. I realise that it is too late to make any change in the system this year, but I hope that when the Minister replies he will be able to say that they will make the arrangements more flexible next year, because I believe this rigid system of licensing has led to much heather which should have been burned this year in Northumberland remaining unburned.
Certain of my constituents have been prosecuted and fined for burning heather after the prohibited period. This year, during the early months, particularly in March, the weather in the north of England was particularly wet and unsuitable for heather burning, whereas in the early days of April the conditions were ideal. But when applications were made for permits, they were refused.
It is ironical that those who were prosecuted in Northumberland for burning heather after the prohibited date were often doing so within sight of the Scottish border, on 11th April, and if they had been burning heather a few yards farther north, across the border, they would not have been contravening the law, and could have gone on burning heather until the end of April without obtaining any


permits. Therefore, it is understandable that they and other members of the hill farming community in Northumberland think, to put it politely, that the law in this respect is somewhat absurd.
It may be said that if, after the prohibited period, anyone wants to burn heather, he can do so by applying to the Minister for a licence. But there is a very big "but" to this clause, because the Regulations require the farmer in question to apply to the Minister for a special licence in writing at least 28 days before the date proposed for the burning. Surely that is red tape at its worst, because it must be apparent to everyone that to burn heather the conditions must be right for burning and the heather must be really dry. To give notice of intention to burn a month ahead of the time is patently farcical. It reminds me of the story of the farmer who got a young man for lambing and applied for his deferment. The reply came back saying that it was much regretted that his deferment could not be agreed to and suggesting that the lambing should be deferred instead.
I know the Minister can point out that the administration of these heather-burning Regulations is left largely to the local people, that is to say, the county agricultural executive committees, who should be aware of the local requirements. All I can say is that as far as Northumberland is concerned the local requirements of the hill farmers have been very sadly neglected. There are very strong feelings in the hill areas of both Northumberland and Durham on this subject.
I ask my hon. Friend to ensure that if he is to allow the administration of these Regulations to remain in the hands of the county agricultural executive committees, they should adopt a somewhat less artbitrary attitude than they have been adopting during the past year. I am sure the Minister is sympathetic to the hill farmers in this matter and wants to help them and not to hinder them. All they are asking is that they should have the rights which the lowland farmer now enjoys—that is, the right to farm their land according to the best of their abilities and as they think is wisest in the best interests of good husbandry.
Therefore, I ask the Minister to say at least, if he cannot say more, that he will look at the whole administration of the

Regulations and that Northumberland, if not also Durham, should be put on a par with Scotland—in other words, that burning should be allowed without any licences until the end of April. If the Minister cannot go as far as that, at least let him say that burning will be allowed without licences or permits up to the middle of April; and if the weather conditions so demand, an open general licence should be granted to the end of April, so that farmers can burn after the middle of April, when the weather previously has been unfavourable. That is all we are asking. We are perfectly reasonable in this matter, and I hope that my hon. Friend will give a reply of a similar nature.

11.7 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I am grateful to my hon. Friend the Member for Hexham (Mr. Speir) for raising this matter, which is, I agree, an important one in his part of the country. It is not an easy matter, and I will try to set out the pros and cons as well as I can.
I accept at once my hon. Friend's remarks in opening about the need for burning heather to some extent for good farming practice, although it is sometimes debatable what area should be burnt each year. Sometimes, I am told, there is a tendency to burn a bit too much, and at other times a tendency to burn too little. It is a question of finding the right degree. I accept, however, the main point made by my hon. Friend.
I do not think that the general purpose of the heather burning Regulations is in question. The power to regulate burning is to be found, as my hon. Friend said, in Section 20 of the Hill Farming Act, 1946. As far as I am aware, it is in no way controversial, because it is generally agreed that some control is necessary as a safeguard against forest fires and—I stress this—to prevent injury to wild life, particularly to nesting birds during springtime.
The difficulty is in drawing the line between necessary and unnecessary restrictions. Perhaps I can explain more nearly the precise effect of the Regulations. At all times of the year they prohibit the starting of burning in the hours of darkness and require reasonable pre-


cautions to be taken to keep the burning under control and to prevent damage to adjacent land. They also require 48 hours' notice to be given to other persons with an interest in the land or in adjacent land.
The important restriction in the Regulations is a general prohibition on all burning between 31st March and 1st November, and that was the main point of my hon. Friend's remarks. This prohibition is not absolute, as my hon. Friend reminded us, and the Minister is free to issue special licences to allow burning in the prohibited period. As the merits of applications for special licences depend almost entirely on local conditions, my right hon. Friend has delegated his power to issue them to the county agricultural executive committees. The procedure is laid down for obtaining these special licences and applications must be made to the committee in writing at least 28 days before the date proposed for the burning. My hon. Friend was critical of that, and I will return to it presently; the applicant must simultaneously give notice in writing to other persons having an interest in the land or in any adjacent land, informing them that they have the right to make representations to the committee within seven days of receiving this notification.
There are a number of other provisions in the Regulations, but I need not mention them now as they are not relevant to my hon. Friend's complaint.
Taking the country as a whole, it is fair to say that these Regulations have worked quite smoothly. There has been no complaint about the general conditions under which permitted burning may be carried out, and they are not onerous. For most farmers, the right to burn between 1st November and 31st March, subject to very simple safeguards laid down in the Regulations, has proved quite satisfactory. There has been from time to time, however, a fair demand for special licences to burn in April, because weather conditions have not been suitable for burning during the normal permitted period.
Many of these applications have been made in Northumberland and Durham, and, in the ordinary way, there has been no difficulty in granting them, though this

year, as I will try to explain, was an exception, for particular reasons. During the last two years or so we have had suggestions that the Regulations are unduly restrictive. The main complaint relates to the closing date of 31st March for the permitted period. It has been suggested to us that in some of the upland areas in Northumberland and Durham the regular arrival in the county agricultural executive committee offices of applications for special licences for April prove that that month, or part of it, should be included in the permitted period, not for the whole country, but for the upland areas of the North-East, where climatic conditions are much like those in Scotland.
Scotland has its own code of law on this subject. There, heather burning is permitted up to 15th April, but it can also go on until 30th April if the permission of the landlord is obtained. That is the differentiation between the two halves of April in Scotland. For land of more than 1,500 ft. above sea level there is provision for further extension. In consequence, it can happen, as indeed it did this year, that a farmer with land on both sides of the border may be burning legally on one part and illegally on the other, and that the police may take him to court in one country and not in the other. I realise the feeling on that point, and that is a matter which we are considering very carefully.
As to the 28-day period for applications for special licences, to which my hon. Friend the Member for Hexham attaches considerable importance, realise that it is irritating to farmers who cannot make their plans very easily so far ahead. But I would ask my hon. Friend to face the position. It is not easy to see how the period can be shortened materially, because, as I reminded him, seven days' notice has to be given for other interested parties to give notice of objection. That is a quarter of 28 days gone straight away. I do not think that we can cut that down. The remainder of the period is left because we have to arrange for meetings of the county agricultural executive committee to deal with the applications. If a number of applications come in on successive days, it can be seen that it is difficult to have a much shorter period than 28 days, because one cannot


reasonably expect a committee to meet continuously on different days. Therefore, there must be a few days in between. It might be possible to make a small reduction in this period, but I think that it would be difficult administratively, and we have to face that fact.
I believe also that this particular irritant would not be so great if we were able to deal with the other side of the question, in other words, give a general licence. I am sure my hon. Friend would agree. In view of that, we have entered into consultation with the interested organisations, and have also consulted the Nature Conservancy and the Hill Farming Advisory Committee for England and Wales, which is responsible for advising the Minister on the exercise of his powers under the Hill Farming Act, under which these Regulations were made.
Apart from the farmers who made the original suggestion and whose position is clear enough, any idea of extending the date was not received with any enthusiasm. Still, now that we have the views of those concerned, we are in a position to consider whether a change ought to be made. The matter is not, of course, immediate, as the argument is about what is to happen in April, 1958, and it would be only right to use the time at our disposal to assemble what scientific data there may be and generally to give this question mature consideration.
On the experience of the years before 1957, it might well have been possible to conclude that in Northumberland and Durham at any rate, the prohibition on burning, say during the first fortnight of April, was not really worth keeping. Unfortunately, 1957 proved a test case for the utility of the Regulations. The winter was wet and warm. The wet weather made burning difficult in permitted periods, and the warmth had the well-known effect of advancing the nesting of game birds. As a result, although there were many applications for special licences for burning in April, the effect of granting them would have been to destroy an unusually large number of nesting birds, because the nesting was taking place unusually early.
The two county committees independently decided that the proper course was to refuse these licences. The

decision naturally went against the grain with the farmers, but bearing in mind that the committee members are first and foremost agriculturists, I do not think anyone can seriously doubt that they were acting objectively and that their decision was probably the right one.

Mr. Speir: No doubt the members of the committees were agriculturists, but I doubt whether many hill farmers were on the committees when these decisions were taken.

Mr. Godber: My hon. Friend probably knows the composition of the committees more closely than I do, but they were local men and I should have thought that they would have some regard for the feelings of the hill farmers—but I take his point.
The main point I wish to make in this connection is that this experience has shown that any new regulations relaxing the control over burning in April will need very careful consideration indeed. Had less restrictive regulations been in operation this year, the wild life might have suffered grievously. We cannot assume that the weather conditions were unique and could never recur, and we must bear in mind this important possibility when considering what changes, if any, are to be made.
We are still working on this problem, and my hon. Friend will not expect me to announce any conclusions tonight. The best assurance I can give him is that, while we must keep a balanced outlook on this matter, I have a great deal of sympathy with the point of view which he has expressed so persuasively tonight. We have got to look at this again and see whether it is safe for us to relax, in the form of general licences, for these counties for at least a little of the month of April. If we feel that we can make some relaxation, from the agricultural point of view we would be most anxious to do so. We will endeavour to find some means of satisfying the desires my hon. Friend has put forward. I am grateful to him for raising what is, I know, an important matter to his constituents. I hope he will accept my assurances.

Question put and agreed to.

Adjourned accordingly at nineteen minutes past Eleven o'clock.